I wasn’t always a momentum investor. Like many of you, I began my career as a contrarian investor. After all, some of history’s most successful investors have been contrarians. Baron Rothschild, Warren Buffett, George Soros — all made their fortunes in part by betting against prevailing market opinion. Baron Rothschild, often considered to be the father of contrarian investing, was a London-based financier in the 18th century. You probably know him from his most famous piece of investing advice: “Buy when there’s blood in the streets.” #-ad_banner-#Although these days the quote simply means buy when others are… Read More

I wasn’t always a momentum investor. Like many of you, I began my career as a contrarian investor. After all, some of history’s most successful investors have been contrarians. Baron Rothschild, Warren Buffett, George Soros — all made their fortunes in part by betting against prevailing market opinion. Baron Rothschild, often considered to be the father of contrarian investing, was a London-based financier in the 18th century. You probably know him from his most famous piece of investing advice: “Buy when there’s blood in the streets.” #-ad_banner-#Although these days the quote simply means buy when others are fearful, it was more literal when he said it. Rothschild invested in beaten-down British bonds while Britain, and most of Europe, were at war with the French. It was risky. If the British had been defeated, which was a real possibility, the bonds would have been worthless. But Rothschild ended up making a small fortune once the British defeated Napoleon’s army in the Battle of Waterloo. Centuries later, contrarian investors are still finding success. George Soros is best-known for making one of the boldest trades in history, contrarian or otherwise. He infamously sold short about $10 billion in British pounds… Read More

Over the years, I’ve been successful trading weather patterns as they relate to commodities such as crude oil, gasoline and grains. As unpredictable as the weather can seem, there are patterns, and traders who get ahead of the crowd can exploit them for reliable profits. Today, I’m going to share one of my favorite seasonal trades with you, and that is the tendency for natural gas prices to rise in the winter months as the colder weather spurs demand for use in home heating. Source: U.S. Energy Administration For seven of the past 10 years, the price… Read More

Over the years, I’ve been successful trading weather patterns as they relate to commodities such as crude oil, gasoline and grains. As unpredictable as the weather can seem, there are patterns, and traders who get ahead of the crowd can exploit them for reliable profits. Today, I’m going to share one of my favorite seasonal trades with you, and that is the tendency for natural gas prices to rise in the winter months as the colder weather spurs demand for use in home heating. Source: U.S. Energy Administration For seven of the past 10 years, the price of natural gas has risen between the beginning of September and the end February, with an average gain of 17.6%. The Farmers’ Almanac predicts the 2014-2015 winter will again bring record cold temperatures for most of the nation. And with natural gas prices near historical lows, this would all but guarantee higher prices over the next few months. #-ad_banner-#Now, you’re probably wondering, if this is the case, why aren’t natural gas prices rising now?  Commodities are different than stocks in that the average person doesn’t go out and buy natural gas, store it in a tank, and then sell it… Read More

It is no secret that retail investors have been mostly absent from the stock market in recent years. Foreign currency trading made up for some of the slack, but it has been a rough year for retail-oriented trading firms such as FXCM (NYSE: FXCM). FXCM’s revenue is primarily derived from clients using its software to make online currency trades. On Aug. 7 after the close, the firm reported a second-quarter loss and a 30% year-over-year decrease in revenue as the company continued to struggle with low trading volume and low volatility in its markets. But then… Read More

It is no secret that retail investors have been mostly absent from the stock market in recent years. Foreign currency trading made up for some of the slack, but it has been a rough year for retail-oriented trading firms such as FXCM (NYSE: FXCM). FXCM’s revenue is primarily derived from clients using its software to make online currency trades. On Aug. 7 after the close, the firm reported a second-quarter loss and a 30% year-over-year decrease in revenue as the company continued to struggle with low trading volume and low volatility in its markets. But then something remarkable happened. The next day, the stock fell 6.6% at the open, but it spent the rest of the day rising. By the close it pared the loss to just 1.3%, and a bottom was presumably set. For the next six trading days, FXCM closed in the green as investors piled back in. Such positive action on the heels of bad news is technically bullish. On the chart, we can see the $12.75 level acted as a spring board for the second time in three months, creating a solid… Read More

Few companies can claim they actually contributed to changing the world. But less than 30 years ago, Microsoft (Nasdaq: MSFT) and Intel (Nasdaq: INTC) did change the world as they defined the standards for personal computers (PCs). With Intel providing the hardware standards and Microsoft defining software, those two companies made the widespread acceptance of the Internet possible.#-ad_banner-# Today, these two companies are still leaders in their markets, but they have become more like stodgy utility companies than the growth juggernauts they were decades ago. Both now trade with low price-to-earnings (P/E) ratios… Read More

Few companies can claim they actually contributed to changing the world. But less than 30 years ago, Microsoft (Nasdaq: MSFT) and Intel (Nasdaq: INTC) did change the world as they defined the standards for personal computers (PCs). With Intel providing the hardware standards and Microsoft defining software, those two companies made the widespread acceptance of the Internet possible.#-ad_banner-# Today, these two companies are still leaders in their markets, but they have become more like stodgy utility companies than the growth juggernauts they were decades ago. Both now trade with low price-to-earnings (P/E) ratios and significant dividend yields. Of the two, I think Intel is the more attractive investment option. Intel is the world’s largest chipmaker and has been for 20 years. According to Computer World, the company accounts for about 17% of the sales in the $307 billion semiconductor market. While PC sales are slowing, they are still significant, and Intel is unlikely to lose its dominant position in the industry in the near future. Analysts following… Read More

The bullish trend in technology stocks has reasserted itself following an April pullback. With a 14% gain so for in 2014, the Nasdaq 100 has outperformed all other major indices. And the tech index is up 28% over the past 52 weeks with new 14-year highs now almost a weekly occurrence. Pandora Media (NYSE: P) is singing a much sadder tune, however, with shares of the streaming music provider down roughly 2% year to date. Yet, the high correlation with the tech sector is evident, as the stock is still up nearly as much as the Nasdaq 100 over the… Read More

The bullish trend in technology stocks has reasserted itself following an April pullback. With a 14% gain so for in 2014, the Nasdaq 100 has outperformed all other major indices. And the tech index is up 28% over the past 52 weeks with new 14-year highs now almost a weekly occurrence. Pandora Media (NYSE: P) is singing a much sadder tune, however, with shares of the streaming music provider down roughly 2% year to date. Yet, the high correlation with the tech sector is evident, as the stock is still up nearly as much as the Nasdaq 100 over the past 52 weeks despite the recent pause. The four-month sideways action between $22 and $28 projects a $6 move to $34 on an upside breakout. The midpoint of the channel provides support at $25 to lean on. The $34 target is about 30% higher than recent prices, but traders who use a capital-preserving, stock substitution strategy could make more than 80% on a move to that level. #-ad_banner-#​One major advantage of using a long call option rather than buying a stock outright is putting up much less capital to control 100 shares —… Read More

Back in 2012, Stephanie Pomboy, founder of MacroMavens, made a rather scary prediction in a Barron’s interview. She called for the end of fiat money and a return to gold as the backing of global monetary value. The argument wasn’t an uncommon one at the time. Central banks around the world were printing money as fast as they could to dig their economies out of the deepest recession in nearly eight decades. The Federal Reserve was well on its way to quadrupling its assets to $3 trillion from 2007. The Bank of Japan was embarking on a plan to double… Read More

Back in 2012, Stephanie Pomboy, founder of MacroMavens, made a rather scary prediction in a Barron’s interview. She called for the end of fiat money and a return to gold as the backing of global monetary value. The argument wasn’t an uncommon one at the time. Central banks around the world were printing money as fast as they could to dig their economies out of the deepest recession in nearly eight decades. The Federal Reserve was well on its way to quadrupling its assets to $3 trillion from 2007. The Bank of Japan was embarking on a plan to double its own assets by 2015. Even the conservative European Central Bank (ECB) was cutting rates, though it did not join the asset-buying party until recently. #-ad_banner-#The idea was that if debtor nations were going to devalue their own currencies by massive money-printing programs, then creditor nations would demand a return to gold-backed monies. Pomboy’s prediction for a return to gold has obviously not come about yet. To be fair, her five-year window doesn’t close until mid-2017. While I don’t agree that fiat money will come to an end, Pomboy certainly hasn’t been alone in calling for investors to look to… Read More

I can remember when demand for shares of Priceline Group (NASDAQ: PCLN) was so great that it pushed its market capitalization above that of the entire airline industry it served. Those bubble days are long gone, and the stock looks to have a long way to fall before getting its wings again. PCLN has been no slouch over the past year. Exploding out of a trading range in May 2013, it ran from roughly $716 to a high near $1,379 earlier this year. Not too shabby. However, since then, it has been falling more than rising, leaving a… Read More

I can remember when demand for shares of Priceline Group (NASDAQ: PCLN) was so great that it pushed its market capitalization above that of the entire airline industry it served. Those bubble days are long gone, and the stock looks to have a long way to fall before getting its wings again. PCLN has been no slouch over the past year. Exploding out of a trading range in May 2013, it ran from roughly $716 to a high near $1,379 earlier this year. Not too shabby. However, since then, it has been falling more than rising, leaving a failed intra-year recovery in its wake. As we can see in the chart, PCLN peaked in March, along with the broader market. But unlike the major indices, the stock was unable to regain in the summer what it lost in the spring. A failure to reach its prior high is a warning sign, especially when the market was successful in its recovery. Next, cumulative or on-balance volume peaked along with prices in March, and it has been setting lower lows ever since. This indicator keeps a running tab of volume on up days… Read More

Shares of American icon Harley-Davidson (NYSE: HOG) have been on quite a ride this year. The stock sold off on July 22, following the company’s Q2 earnings announcement despite a solid beat on both the top and bottom line. Revenue rose 12% year over year to $2 billion, and earnings came in 34% higher at $1.62 per share. The Street had only been looking for EPS of $1.46 on $1.8 billion in sales. #-ad_banner-#However, management said it was disappointed with the sales figures, which it blamed on poor weather conditions, and slashed its… Read More

Shares of American icon Harley-Davidson (NYSE: HOG) have been on quite a ride this year. The stock sold off on July 22, following the company’s Q2 earnings announcement despite a solid beat on both the top and bottom line. Revenue rose 12% year over year to $2 billion, and earnings came in 34% higher at $1.62 per share. The Street had only been looking for EPS of $1.46 on $1.8 billion in sales. #-ad_banner-#However, management said it was disappointed with the sales figures, which it blamed on poor weather conditions, and slashed its full-year shipment growth expectations to 3.5% to 5.5% from a previous 7% to 9%. This prompted a downgrade from Argus to “neutral” from “buy.” Yet, the stock appears to have bottomed in early August, making a higher low versus its February low, and shares have begun to tick up. I think the downside has already been priced in at these levels. The company’s share buyback program and stock’s 1.7% dividend yield should also help put a floor under shares. HOG currently trades at 14.6 times next year’s estimated earnings of $4.38 per share, below its historical… Read More

Short selling is a hotly debated topic among investors, especially after a strong bull market when valuations start looking a little stretched. Some investors have no problem with borrowing shares to sell, hoping to make money as prices fall. Others see short sellers as manipulators — or worse. One thing is certain: Short sellers can sometimes be their own worst enemies and may give you the opportunity to make fast money with a risk-reduced strategy. #-ad_banner-#You see, short sellers eventually have to buy back the shares they borrowed to close out their position. They also may… Read More

Short selling is a hotly debated topic among investors, especially after a strong bull market when valuations start looking a little stretched. Some investors have no problem with borrowing shares to sell, hoping to make money as prices fall. Others see short sellers as manipulators — or worse. One thing is certain: Short sellers can sometimes be their own worst enemies and may give you the opportunity to make fast money with a risk-reduced strategy. #-ad_banner-#You see, short sellers eventually have to buy back the shares they borrowed to close out their position. They also may have to pay a fee to borrow and do not earn interest on the proceeds from the short sale. Worse yet, they are responsible for any dividends paid on the shares while they are short. Unless shares have downward momentum, short sellers start to see their investment falling further into the red. If shares start rising too much, shorts may give up the gamble and start buying back their positions. You can take advantage of this scenario with a covered call strategy that lowers your risk while still offering strong returns. Read More

It’s rare that I’ll go long any stock right after it’s made a series of new highs, but Southwest Airlines’ (NYSE: LUV) steady bullish breakout run seems likely to continue into the end of the year. I’m fortunate enough to live just five minutes from Southwest’s corporate headquarters at Dallas Love Field. Not only can I easily catch last-minute flights, but I’ve also befriended numerous Southwest employees and gained an insider’s perspective on the company. Between their input and my observations and research, I see clear blue skies and tailwinds for Southwest this quarter. #-ad_banner-#There’s been a long-standing… Read More

It’s rare that I’ll go long any stock right after it’s made a series of new highs, but Southwest Airlines’ (NYSE: LUV) steady bullish breakout run seems likely to continue into the end of the year. I’m fortunate enough to live just five minutes from Southwest’s corporate headquarters at Dallas Love Field. Not only can I easily catch last-minute flights, but I’ve also befriended numerous Southwest employees and gained an insider’s perspective on the company. Between their input and my observations and research, I see clear blue skies and tailwinds for Southwest this quarter. #-ad_banner-#There’s been a long-standing law in Texas called the Wright Amendment that’s limited Southwest’s routes and profits over the past 35 years. The law restricts nonstop service from Love Field to airports in Texas and eight other states. The Wright Amendment is being repealed in mid-October, and traffic at the Dallas airport is expected to increase nearly 50%. Southwest will be in a prime position to capitalize on this, but that’s only part of the reason I think the stock is a buy here. Coinciding with the Wright Amendment’s full repeal, Southwest has been acquiring new planes and training its… Read More