I love earnings season. The tug-of-war between earnings beats and disappointments can set the stage for some serious profits on option trades.  I’ve used earnings announcements to make 40% in three weeks on Tesla Motors (Nasdaq: TSLA), 65% from Amazon (Nasdaq: AMZN) in 18 days and even 50% in Burlington Stores (NYSE: BURL) in just four days. Just this Wednesday, I told my readers about a limited-time opportunity in Southwest Airlines (NYSE: LUV). Most of you are probably familiar with Southwest, which has built a brand for itself as a low-cost airline. Today, it’s the largest domestic carrier in the… Read More

I love earnings season. The tug-of-war between earnings beats and disappointments can set the stage for some serious profits on option trades.  I’ve used earnings announcements to make 40% in three weeks on Tesla Motors (Nasdaq: TSLA), 65% from Amazon (Nasdaq: AMZN) in 18 days and even 50% in Burlington Stores (NYSE: BURL) in just four days. Just this Wednesday, I told my readers about a limited-time opportunity in Southwest Airlines (NYSE: LUV). Most of you are probably familiar with Southwest, which has built a brand for itself as a low-cost airline. Today, it’s the largest domestic carrier in the United States, based on number of passengers flown. The company was set to report earnings before the open last Thursday, but despite a strong track record of earnings beats, shares were down more than 3.5% for the month.  In fact, over the previous four quarters, the company had beaten expectations by an average of 10%. Better yet, in the week each of these earnings releases was announced, shares rose an average of 8%. We saw the biggest jump in January, with LUV rising 16% the week of fourth-quarter earnings on a surprise boost from lower fuel… Read More

For the past five years, investing in agricultural commodities has not been for the faint of heart. After rebounding quickly from the Great Recession on heavy demand from emerging markets, record harvests and slowing Chinese demand led to a general downtrend in prices, with volatile spikes in 2012 and 2014. This year, we’ve seen corn and wheat prices fall on an upgrade in production forecasts by the USDA and lowered expectations for export demand. Beyond strong expectations for this year’s harvest, a strong dollar is making U.S. crops relatively more expensive on the global market. But could this… Read More

For the past five years, investing in agricultural commodities has not been for the faint of heart. After rebounding quickly from the Great Recession on heavy demand from emerging markets, record harvests and slowing Chinese demand led to a general downtrend in prices, with volatile spikes in 2012 and 2014. This year, we’ve seen corn and wheat prices fall on an upgrade in production forecasts by the USDA and lowered expectations for export demand. Beyond strong expectations for this year’s harvest, a strong dollar is making U.S. crops relatively more expensive on the global market. But could this be a repeat of prior years when prices spiked due to higher demand or lower-than-expected supply? Beyond long-term catalysts to support prices, there are several near-term issues that could drive prices for corn and other grains higher this year.  Population Explosion Supports Grain Demand  It may have taken more than 200,000 years for the global population to reach 1 billion, but it took only 123 years to grow that number to 2 billion. In 2012, that number hit 7 billion, and the UN predicts we’ll add our next billion by 2026, a span of just 14 years. #-ad_banner-#Beyond the absolute… Read More

I saw a headline last week warning that an analyst at a major Wall Street firm believes the S&P 500 is at risk of a 5%-10% decline.  I have no doubt Deutsche Bank’s (NYSE: DB) David Bianco is correct. Down moves in the stock market actually come fairly often. One study found that a 5% correction occurs, on average, three times a year, while we see a 10% decline about once a year.  The last 10% decline in the S&P 500 occurred about three and a half years ago in October 2011. So, are we overdue for a… Read More

I saw a headline last week warning that an analyst at a major Wall Street firm believes the S&P 500 is at risk of a 5%-10% decline.  I have no doubt Deutsche Bank’s (NYSE: DB) David Bianco is correct. Down moves in the stock market actually come fairly often. One study found that a 5% correction occurs, on average, three times a year, while we see a 10% decline about once a year.  The last 10% decline in the S&P 500 occurred about three and a half years ago in October 2011. So, are we overdue for a 10% correction? That is a silly question. When I hear an analyst say, “We are overdue,” or “This bull market is long in the tooth,” I discount everything else they have to say. Markets don’t follow a schedule. They go up and down based on earnings and sentiment, among other factors. But prices never have and never will change direction just because the calendar changes. #-ad_banner-#The better question to ask is: “What would I do if I knew a 10% correction was coming?” I was in New York recently and had a chance to catch up with one my mentors,… Read More

The year 2004 was one of the most exciting times of my life. The future looked bright. That was the year I beat out hundreds of candidates to enter an exclusive bond-trading program for a multi-billion-dollar brokerage firm. I was going to dig deeper than ever into the market. I was going to be around market junkies all day. And most importantly, I was going to become a trading hotshot and make a few million bucks before I turned 30. #-ad_banner-#Three years later, two of those things had come true, and one had not… After spending years fully entrenched in… Read More

The year 2004 was one of the most exciting times of my life. The future looked bright. That was the year I beat out hundreds of candidates to enter an exclusive bond-trading program for a multi-billion-dollar brokerage firm. I was going to dig deeper than ever into the market. I was going to be around market junkies all day. And most importantly, I was going to become a trading hotshot and make a few million bucks before I turned 30. #-ad_banner-#Three years later, two of those things had come true, and one had not… After spending years fully entrenched in the markets and learning from the sharpest minds in the business, I had learned a valuable lesson: trading is no quick path to riches. The cumulative effect of making a few hundred trades a day for years had left me emotionally and financially spent. I found myself at a crossroads. I had loved the market ever since joining the stock market club in sixth grade. I wasn’t ready to walk away from it completely, but it was clear that my relationship with the market needed to evolve. Transitioning out of trading was one of the hardest things I’ve ever had… Read More

After nearly three years of extremely weak economic growth, the European Central Bank is finally delivering on Mario Draghi’s pledge to do “whatever it takes” to get the region back on track. The central bank is set to pump $64 billion into the economy through monthly bond purchases through September 2016. The quantitative easing program, alluded to in September, formally announced in January and started on March 9, may already be having an effect on the economy in terms of sentiment.  Q4 GDP growth of 0.3% beat expectations, and manufacturing data showed signs of life in March. Exports to the… Read More

After nearly three years of extremely weak economic growth, the European Central Bank is finally delivering on Mario Draghi’s pledge to do “whatever it takes” to get the region back on track. The central bank is set to pump $64 billion into the economy through monthly bond purchases through September 2016. The quantitative easing program, alluded to in September, formally announced in January and started on March 9, may already be having an effect on the economy in terms of sentiment.  Q4 GDP growth of 0.3% beat expectations, and manufacturing data showed signs of life in March. Exports to the United States could get a big boost this year on a massive depreciation in the euro versus the U.S. dollar. All things considered, I would say it could be a very good year for European stocks, and possibly most of 2016 as well. #-ad_banner-#There is one fly in the ointment. Greece is back in the headlines as officials were said to have informally approached the IMF to delay repayment on the country’s debt but were denied. Thanos Vamvakidis, head of European G10 FX strategy at BofA Merrill Lynch Global Research, said the country may run out of money if a… Read More

The first Saturday in May this year will herald an extraordinary annual event — one that we will likely not have the chance to witness on many more occasions in our lifetime. The event is widely celebrated in the financial press, marking a time where investors come together to celebrate, speculate about and witness one of the great masters of investing in the flesh. #-ad_banner-#I’m talking, of course, about Warren Buffett and the annual Berkshire Hathaway shareholder meeting. At 84 years old, this will be one of the remaining few times we’ll have the chance to hear straight from the… Read More

The first Saturday in May this year will herald an extraordinary annual event — one that we will likely not have the chance to witness on many more occasions in our lifetime. The event is widely celebrated in the financial press, marking a time where investors come together to celebrate, speculate about and witness one of the great masters of investing in the flesh. #-ad_banner-#I’m talking, of course, about Warren Buffett and the annual Berkshire Hathaway shareholder meeting. At 84 years old, this will be one of the remaining few times we’ll have the chance to hear straight from the famous “Oracle of Omaha” about his thoughts on the market, where the U.S. economy is headed, and what it means to be a successful investor. Many of our analysts here at StreetAuthority have had the chance to attend Berkshire meetings over the years. I’ve had conversations with many of them about the spectacle, which seems to grow with each passing year. But one thing has always stuck with me that I think is worth mentioning, and it’s that while the event always makes for good television, what often seems to be lost is what Buffett actually says… or more importantly,… Read More

Two of the most important lessons I’ve learned in more than 20 years of professional analysis and trading are:  1. The market nearly always overreacts, and  2. Investors are blind to the writing on the wall when fundamentals turn.  And I’m glad this is the case, because betting against market overreactions is one of the best ways to make money in the market. It’s how I plan to make 67% with today’s trade and how we recently closed a 69% winner in Profitable Trading’s Trade of the Week.  Less than a… Read More

Two of the most important lessons I’ve learned in more than 20 years of professional analysis and trading are:  1. The market nearly always overreacts, and  2. Investors are blind to the writing on the wall when fundamentals turn.  And I’m glad this is the case, because betting against market overreactions is one of the best ways to make money in the market. It’s how I plan to make 67% with today’s trade and how we recently closed a 69% winner in Profitable Trading’s Trade of the Week.  Less than a month ago, I told readers about an opportunity in Valero Energy (NYSE: VLO). Shares were trading at dirt-cheap valuations thanks in part to oil’s sell-off. The market was clearly overreacting by punishing all stocks in the sector, even if they didn’t deserve it.  “The real opportunity lies in the fact that Valero is now buying oil 50% cheaper than last year, but has only had to reduce its selling price by 35%. Incredibly, shares are actually lower than where they were last year, despite the cheaper costs, increased consumption and improved margin.” Shares started moving higher almost immediately after… Read More

April will be the 70th month of economic expansion for the United States. That seems like a long amount of time, but it’s not abnormal. The last three expansions in the United States lasted an average of 95 months, with the longest lasting 10 years. Using recent history as a guide, we can estimate how far away we are from the next recession (about two years based on the average expansion length). But we have no way of knowing if our current expansion will end before then or maybe set a new record. Not even economists know when we’ll transition… Read More

April will be the 70th month of economic expansion for the United States. That seems like a long amount of time, but it’s not abnormal. The last three expansions in the United States lasted an average of 95 months, with the longest lasting 10 years. Using recent history as a guide, we can estimate how far away we are from the next recession (about two years based on the average expansion length). But we have no way of knowing if our current expansion will end before then or maybe set a new record. Not even economists know when we’ll transition from one phase into the next. In fact, economists generally don’t know that we’re even in a recession until 6-12 months after it begins. Knowing that we’re most likely nearing a later stage of our expansion, my focus has turned to what comes next. More specifically, I want to know whether the companies I’m investing in are prepared for the end of this expansion. #-ad_banner-#While it’s not possible to know when the next recession will start, we can work around that by investing in companies that perform well during both feast and famine. If a company… Read More

Many oil explorers and producers (E&P) are on the precipice right now. Years of high oil prices have led to a bonanza of land grabs and acquisitions despite premium valuations. Companies took on high levels of debt, reasoning that the revolution in U.S. production would mean cash flows could easily cover the interest. But now that oil prices have been cut in half, nearly $11.6 billion of that debt could be at risk of default. This earnings season, companies are expected to announce major changes to their capital spending plans to control the cash bleed while analysts continue… Read More

Many oil explorers and producers (E&P) are on the precipice right now. Years of high oil prices have led to a bonanza of land grabs and acquisitions despite premium valuations. Companies took on high levels of debt, reasoning that the revolution in U.S. production would mean cash flows could easily cover the interest. But now that oil prices have been cut in half, nearly $11.6 billion of that debt could be at risk of default. This earnings season, companies are expected to announce major changes to their capital spending plans to control the cash bleed while analysts continue waiting for a sign that the energy market has bottomed. All the uncertainty means high risk for investors… but also the potential for high returns for the companies that can survive until energy prices recover. #-ad_banner-#I am not naive enough to try calling a bottom in energy prices, but with this option trade, I don’t have to. In fact, today’s trade can give you the opportunity to minimize risk and amplify any potential returns, all while preserving capital if the trade doesn’t work out. Don’t Gamble With Your Money… Use Options to Minimize Risk and Preserve Capital The E&P space… Read More

I didn’t expect to win the award. I was really looking for feedback from other financial professionals regarding my trading ideas. But a group of market experts critically reviewed my work and determined that the strategy I present my readers each week is an example of one of the best ideas in technical analysis. My research paper is the foundation of my current streak of 86-for-86 winning closed trades. Recently, I had the honor of attending the 2015 Market Technicians Association’s Gala Awards Dinner in New York City. There I was presented with the Charles H. Dow Award, which is… Read More

I didn’t expect to win the award. I was really looking for feedback from other financial professionals regarding my trading ideas. But a group of market experts critically reviewed my work and determined that the strategy I present my readers each week is an example of one of the best ideas in technical analysis. My research paper is the foundation of my current streak of 86-for-86 winning closed trades. Recently, I had the honor of attending the 2015 Market Technicians Association’s Gala Awards Dinner in New York City. There I was presented with the Charles H. Dow Award, which is an award that highlights outstanding research in technical analysis. And today I wanted to give you a glimpse of my award winning research. #-ad_banner-#I spend a great deal of time studying and building on the works of successful investors. One of the most influential on my investing career has been Larry Williams, a well-known trader and author of 2003 book, “The Right Stock at the Right Time.” But it was actually an article he wrote in 2007 that has been one of the keys to my success. Many traders follow the Volatility S&P 500 Index (VIX) — a measure of… Read More