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Wednesday's "Earnings Beat" Makes This The Perfect "Bad-Market" Tech Stock

In last week’s Private Briefing report Our Experts Show You the Stocks to Pick in a ‘Stock-Picker’s Market’,” Money Map Press Chief Investment Strategist Keith Fitz-Gerald identified SanDisk Corp.(NasdaqGS: SNDK) as one of three stocks to buy in the face of the stock market sell-off.

And now we see why…

  • Dow Jones

  • Stock Market Today: Gauging the Fiscal Cliff Effect U.S. markets were mixed and relatively quiet Monday as investors digested the weekend news that fiscal cliff talks had failed to lead to a deal - possibly even derailing earlier progress.

    Just before 2 p.m. on Wall Street, the Dow Jones Industrial Average was down 26 points, and the Standard & Poor's 500 Index and Nasdaq were both treading slightly lower.

    On the economic calendar to kick-off the busy week were reports on October construction spending, November manufacturing and auto sales.

    What's Moving the Stock Market Today

    • Manufacturing Data
    Data released Monday from the Institute for Supply Management revealed the U.S. manufacturing sector dipped back into contraction in November. Businesses reined in spending and curbed expansion projects while they anxiously await the looming blows from the fiscal cliff.

    The ISM's manufacturing purchasers' index fell unexpectedly last month to 49.5 from 51.7 in October, marking the lowest reading since July 2009. Forecasts were for a reading of 51.5. A reading above 50 suggests expanding activity. Monday's reports gave no such hints.

    According to economists surveyed by Dow Jones Newswire, demand has slowed in the second half of 2012. The culprit is the imminent fiscal cliff.

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  • Stock Market Today: Fiscal Cliff Fears Can’t Stop This 160% Gainer The stock market today opened flat before turning negative as negotiations on the fiscal cliff have not progressed, outweighing Greece's new deal concerning its debt.

    • Greece Close to Massive Bailout- Late Monday the International Monetary Fund, Eurozone finance ministers, and Greece came to an agreement that drastically eases the terms regarding Greece's repayment of debt and sets the stage for a third bailout. The deal lowers interest rates for bailout loans, suspends interest payments for a decade, pushes the deadline back for final repayments until the 2040s, and initiates a bond buyback program. Greece is also now on the brink of receiving a $44.7 billion loan beginning Dec. 13. "The big challenge now is to implement the decisions," Greek Finance Minister Yannis Stournaras said. "Greece has huge potential." The agreed upon measures aim to bring Greece's debt-to-GDP ratio down to 124% by 2020 from the projected level of 190% in 2014. The deal was accomplished by installing unprecedented measures such as carefully monitoring how Greece spends the debt, keeping an account strictly for debt servicing, and insisting that Greece completes the bond buyback before receiving more aid. "Euro-zone countries have put their money where their mouth is," Carsten Brzeski, an economist at ING Group NV in Brussels told Bloomberg News. "However, it is clearly not a carte blanche for Greece but rather a very tight leash."
    • Fiscal Cliff Talks Resume- Congress returned from its Thanksgiving recess and the fiscal cliff will be at the forefront of discussions this week. After last week's short burst of optimism there has not been any further progress on a deficit reduction deal. But for now consumers seem unfazed by the whole debacle, as today the consumer confidence index reached levels not seen since February 2008. The onset of higher taxes coupled with deep spending cuts was thought to lower consumer confidence, but instead consumers spent a record amount of money through Black Friday and Cyber Monday. The consumer confidence gauge interestingly showed expectations for six months from now, when we could be off the fiscal cliff, unexpectedly rose. The percentage of respondents expecting more jobs to be available in six months rose to its highest level since February 2011, and the percentage expecting to buy a home in the next six months hit a new all-time high. "The consumer is in a better place than several years ago," Michael Gapen, a New York-based senior U.S. economist at Barclays PLC (NYSE ADR: BCS), told Bloomberg. "A lot of the numbers are improving, whether it is household balance sheets or the state of the housing market or employment."
    While the market is trying to turn positive, here is one stock surging on a medical breakthrough, another soaring on a settlement with Google Inc. (Nasdaq: GOOG), and a third that is up after announcing a special dividend.

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  • Stock Market Today: Why We'll Continue to "Drift Sideways" The stock market today opened higher before falling once again as fiscal cliff concerns continue to weigh on investors' minds.

    • Stocks continue to slide- After Cisco Systems Inc. (Nasdaq: CSCO) reported its fiscal first-quarter earnings the markets started the day positive, but quickly turned red. One week after the election, fiscal cliff concerns continue to mount as the president and Congress meet later this week to hopefully negotiate a deal. So far no progress has been made on the debt reduction talks and until that happens don't expect the markets to change course. "We will continue to drift sideways until we see some progress on the fiscal cliff negotiations," Peter Jankovskis, co-chief investment officer for Oakbrook Investments told Bloomberg News in a phone interview.
    A major reason for the post-election sell-off is the prospect of higher taxes next year, and yesterday U.S. President Barack Obama made it clear his agenda on that issue has not changed.

    • President calls for $1.6 trillion more in revenue- When President Obama meets with congressional leaders on Friday he will ask for double the amount of revenue that was discussed at budget talks in 2011. On Tuesday, the president met with union leaders and other liberal groups and stated he will now seek $1.6 trillion in additional revenue over the next decade. That will be accomplished partially through higher tax rates, something Republicans have not yet said they would agree to. But Republicans have offered to accept extra revenue if Democrats can agree to making structural changes to entitlement programs. "New revenue must be tied to genuine entitlement changes," Senate Minority Leader Mitch McConnell, R-KY, said Tuesday. "Republicans are offering bipartisan solutions and now it's the president's turn. He needs to bring his party to the table." An agreement, which included $800 billion of extra revenue, between House Speaker John Boehner, R-OH, and President Obama failed when the President asked for $1.2 trillion in additional revenue. That deal would have lowered the deficit by $4 trillion over ten years, and now President Obama is seeking $1.6 trillion, a number much higher than Republicans will likely agree to.
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  • Stock Market Today: Do You Own This 30% Winner? It was no surprise that the stock market today was quiet with little volume and not much movement.

    In a day when the U.S. markets closed at 1 p.m. positive economic reports on motor vehicle sales and factory orders sent the markets slightly higher, and one company was up more than 30%.

    Factory orders for U.S. factories rose 0.7% which was the first increase in bookings in three months. Last month's revised figure showed a 0.7% drop and economists had expected a 0.1% increase for June.

    Many major automakers reported increased sales with U.S. automakers Chrysler, Ford and GM leading the way.

    With the market off tomorrow and a shortened day today, traders expect a subdued state until Friday's latest unemployment numbers are released.

    The major news came from British banking empire Barclays PLC (NYSE ADR: BCS).

    Barclays PLC (NYSE ADR: BCS) announced Tuesday that its CEO Robert Diamond would resign effective immediately in the wake of the scandal involving lending rate manipulation.

    Barclays was fined $450 million last week by British and U.S. regulators and is among other banks involved in similar lawsuits concerning rate fixing during the financial crisis of the past four years.

    British Chancellor George Osborne cheered the resignation of Diamond calling it the "right decision" and encouraged banks to move forward and continue lending.

    "We need our banks to be focused on lending to the economy, not on the scandals of the past, and I hope this will be the first step towards a new culture of responsibility in British banking which is what the British people want to see," Osborne told BBC Radio 4's "Today" program.

    Diamond, who became CEO on Jan. 1 2011, is set to face British lawmakers tomorrow for questioning. Barclays stock fell 16% on June 28 when the scandal broke and is down almost 2% today.

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  • Jim Rogers: Market Surge from Eurozone Debt Crisis Deal Won't Last Stock markets around the world soared Friday in reaction to the morning's Eurozone debt crisis deal, but noted investor Jim Rogers wasn't impressed.

    "This is no more than just another temporary stopgap to make the market feel good for a few hours, days or even weeks," Rogers, Chairman of Rogers Holdings, told CNBC. "Then everybody's going to wake up and say, "This doesn't solve the problem.'"

    Meeting in Brussels, European leaders announced a plan early Friday that would provide struggling banks with money directly from the bloc's bailout fund.

    The leaders also said bailout funds could be used to stabilize European bond markets. But they did not tie such use to additional austerity measures, which have angered citizens in debt-troubled nations like Greece and Spain.

    The summit is just the latest in a series of high-level attempts to resolve the 2-year-old Eurozone debt crisis, which has required bailouts of Greece, Portugal, Ireland, and most recently the Spanish banking system.

    Markets around the world surged on the announcement, with some European indexes rising as much as 4%. In the United States, the Dow Jones Industrial Average shot up 200 points at the open. The Standard & Poor's 500 Index was up about 25 points, or just under 2%.

    Don't get used to it, Rogers said.

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  • Election 2012: President Obama at the Mercy of U.S. Economy U.S. President Barack Obama's chances for re-election in 2012 are increasingly tied to the fate of the U.S. economy, poll results show.

    Meanwhile, presumptive Republican nominee Mitt Romney hasn't gotten as much benefit from the weak economy as one would expect - a sign of his inability to connect with voters.

    The past month has not been kind to the U.S. economy - or President Obama's standing in the polls.

    The barrage of bad news has included:

    "The economy is going through a rough patch, and that more than anything is going to determine President Obama's future," said Ipsos pollster Chris Jackson in comments on a Reuters/Ipsos poll taken in early June. "People's unhappiness with the economy carries over pretty directly to the president's numbers, and we see those weakening."

    In that poll, President Obama's job approval rating slipped from 50% in May to 47%, and those saying the country is on the wrong track jumped 6 points to 68%.

    Meanwhile, Romney gained 6 percentage points in the head-to-head matchup, making the Election 2012 race a statistical dead heat (Obama 45%, Romney 44%).

    Although President Obama's argument that he inherited economic problems too severe to fix in three years resonates with his liberal base, the moderates and independents likely to decide who sits in the Oval Office next year aren't so sure.

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  • Stock Market Today: What Investors Can't Miss Companies making headlines in the stock market today include Dell (Nasdaq: DELL), Johnson & Johnson (NYSE: JNJ), and JPMorgan Chase (NYSE: JPM).

    After Tuesday's closing bell Dell (Nasdaq: DELL) gave shareholders good news: it will begin paying a dividend later this year.

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  • Dow Jones Erases 2012 Gains – What's Next? The "sell in May and go away" approach panned out this year as the month was not merry for markets.

    U.S. equities experienced a steep drop during May, enduring the worst monthly declines in two years. The Dow Jones Industrial Average fell 6.2%.

    A good part of May's decline was blamed on the ongoing European sovereign debt crisis that has swelled of late and shattered investors' confidence. But things on the home front are far from ideal.

    The flight from stocks flowed into the first day of June. The Dow plunged 274 points Friday, erasing all of the year's gains. Fueling Friday's fall was May's dreadful U.S. jobs report, which showed employers added just a trifling 69,000 in payrolls, less than half the expected 150,000.

    The Standard & Poor's 500 Index and Nasdaq both plummeted more than 2%. The Nasdaq has given back more than 10% since its late-March peak.

    Traders consider a 10% drop to be a market correction. Meanwhile, the S&P 500 is just a mere point above correction territory.

    Just 17 of the 500 companies in the S&P index ended higher on Friday.

    "The big worry now is that this economic slowdown is widening and accelerating," Sam Stovall, chief equity strategist at market research firm S&P Capital IQ, told the Associated Press.

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  • Stocks Have You Worried? Here's What You Do Last Tuesday, USA Today ran a long Page 1 story under the headline "Invest in Stocks? Forget About It."

    The story's message was loud and clear: U.S. stocks have risen more than 100% from their March 2009 bear-market bottom - including 25% since October and 9% so far this year - but most retail investors still wouldn't touch them with a 10-foot pole.

    And with the Standard & Poor's 500 Index now on a losing streak - it's down about 5% from its April 2 high, according to Bespoke Investment Group LLC - you can bet that this "keep-stocks-away-from-me" sentiment has only intensified.

    I mentioned this to Keith Fitz-Gerald, our chief investment strategist, during a private briefing last week.

    True to form, Keith quickly said out loud what I had already been thinking.

    "BP, those investors are making the mistake of their lives," he said. "In fact, I'll wager that they're actually compounding an already-huge mistake. They missed out on the most-powerful stock market rebound since the Great Depression - and they did that after having sold out at the very bottom of the bear market that preceded it, meaning they locked in some of the most-horrific market losses most investors have ever seen."

    If you're in that group, don't fret: You can recover.

    In fact, Keith helped me lay out a game plan just for you - one that will let you take charge, put the odds in your favor and even capitalize on approaching opportunities that Wall Street will be slower than you to see.

    Let's take a look ...

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  • Earnings Fuel Stock Market Gains – Dow Jones Soared More than 100 Points Midday Yes, Friday was all about the earnings.

    The stock market rallied Friday thanks to a roaring round of positive earnings reports - with a little help from positive news out of Europe.

    Just after noon, the Dow Jones Industrial Average climbed 113 points, the Standard & Poor's 500 jumped 9 points and the Nasdaq gained 22.

    With little on the economic calendar to close out the week, and no major reports due, market participants focused on encouraging first-quarter results from a spate of several large and market-influencing firms.

    "There's been a wrestling match all week long between strong earnings and weak economic data. At the moment earnings are winning," Lawrence Centura, portfolio manager at Federated Investors told the Associated Press.

    Strong Earnings Push Stock Market Gains

    To date, quarterly earning has been pleasantly strong.

    "The number of companies reporting positive surprises is much higher than it typically is at this stage in the game," Fred Dickson, chief market strategist of D.A. Davidson & Co. told CNN Money. "They're only beating by a little, but it's still a significant number of companies and that's the wow factor."

    Of the 212 companies in the S&P 500 that have reported, better than 80% have exceeded expectations, according to Thomson Reuters. During a typical quarter, the percentage of companies that top forecasts is 60%.

    Here are some recent highlights:

    • Tech giant Microsoft (Nasdaq: MSFT) lead Friday's gains in the broad-based rally after beating expectations late Thursday, reporting sales growth of 6% thanks to its Window and Office products. MSFT gained 4.55% Friday to close at $32.42.
    • Investors also ate up better-than-expected numbers from fast-food king McDonald's Corp. (NYSE: MCD), which ended the day up. The company proved it remained a worldwide favorite with same-store sales up 8.9% in the U.S., 5% in Europe and 5.5% in Asia-Pacific, Middle East and Africa. Revenue rose 8% (excluding currency fluctuations).
    • Robust earnings from General Electric (NYSE: GE) pushed its stock up 1.15% to $19.36. GE narrowly beat expectations with quarterly profit of 34 cents a share, a penny higher than expected, and revenue of $35.18 billion compared to a forecast $34.7 billion.
    • Meanwhile, traders traded E*Trade (Nasdaq: ETFC) up some 6% on better-than-expected first-quarter results. E*Trade's first-quarter profit rose 38% from a year earlier.
    • Technology manufacturer Honeywell (NYSE: HON) beat on both earnings and revenue, sending the honey pot buzzing. First-quarter income climbed 17% from a year earlier, and the company raised its 2012 forecast.
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  • The Case for Spitting into the Wind (At Least for Now) You've heard the expression "You don't spit into the wind," haven't you?

    Well, it's true when it comes to trading and investing, too. You keep the wind at your back, and you don't give up easy profits by bucking the trend.

    That's all well and good, so long as the wind is coming from a discernible direction. I prefer a warm southwest breeze myself. That's why I live where I live (in Miami).

    But we have no control over the many ill winds that blow over our investing horizons.

    The best we can do is stay aware of subtle shifts in directional changes, and watch out they don't strengthen into hurricane-force monsters.

    I've been cautiously (too cautious, I admit) bullish since October, and I remain optimistic that stocks have enough momentum to try and push through important psychological barriers - such as 13,000 on the Dow, 1,375 and 1,400 on the S&P 500, and 3,000 on Nasdaq.

    That doesn't mean we won't see a correction first. Or that last Tuesday wasn't a tiny correction in and of itself.

    But 30 years of hardcore trading, and catching every major move in that long time span (no, I hardly ever pick the exact top or bottom, but I have come close) has taught me to go with my gut, to know when I "blink" that it means something.

    And lately, I'm starting to "blink" more and more...

    I'm getting the feeling that something's wrong, and, somewhere, the eye of a terrible storm could be forming. There's nothing out there that I've read (and I read a lot), or heard, or come across in any research, either quantitative or fundamental, that articulates what this nagging feeling is that's hanging over markets.

    So, it looks like I'll have to be the one to put it out there.

    But first let me be clear. I'm not spitting into the wind here. I'm still going with the path of least resistance.

    What I am doing is presenting the backdrop of what people have lost sight of as they look front and center on the investing stage.

    Am I saying the eye of a hurricane is forming? No. I'm saying it already has formed.

    I'm saying keep buying cautiously and keep raising your stops as markets go higher, if they do. I'm saying keep watching these developments with me.

    Things change, and this brewing storm could dissipate, but it could also turn really ugly, really quickly.

    If the storm strengthens, and that's my bet, have a fail-safe plan to get out of speculative long positions, a plan to selectively add to core positions on the way down, and a plan to put on short-side positions that will make you a ton of money if I'm right.

    Okay, ready?

    Here's where the winds have shifted...

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  • You Asked, He Answered: Shah Gilani on China, Ben Bernanke, the Fed and Much More…
    Thanks for flooding my email inbox. I asked for it...

    Let's start off with some comments and questions about Ben Bernanke and the Fed....

    Q: I see no distinguishable difference in the relationship that government has with the Fed/Banking Systemand some individual getting involved with a ruthless loan shark. ~ James M.

    A: The Fed has a no-interest rate policy, while loan sharks charge an arm and a leg. That's one difference. There may be others, but I can't think of any right now.

    Q: Shah I beg to differ with you re: your feelings towards Mr. Bernanke. Like you, he understands the... Read More...
  • The Dow Hit 13,000 – Will it Stick? The Dow Jones Industrial Average climbed to above 13,000 briefly today (Tuesday) for the first time since May 2008. Now investors wonder if the gain will last - and possibly soar even higher.

    The Dow touched above 13,000 around 11:30 a.m., pulled back then crossed the line again just after noon.

    The market has climbed despite concerns surrounding Greece as well as the continued U.S. economic recovery. The gain represents about a 25% increase since the Dow touched its 2011 low of 10,404 in October. The Dow at 13,000 is only 8.9% from its all-time high of 14,174.53, reached on October 9, 2007.

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  • Five Ways to Make 2012 Your Best Year Ever I hear it everywhere I go. I'll start investing again...

    ...when the debt problem is fixed.

    ...when the markets pull back a little.

    ...when the EU crisis is over.

    ...when the elections are over.

    Chances are you've said some of these same things to yourself.

    Yet, waiting is exactly the wrong thing to do. Time is something you never get back.

    And when it comes to consistent investment returns, time is the one thing you always have to capitalize on - without fail.

    Besides, waiting makes it harder to get back in the game. Ask anybody who missed the S&P 500's 99.53% run up off March 2009 lows that carried things until April 2011.

    Or the 87.26% run up through July 2007 following the low set in 2003. Or the 569.25% move from November 1987 (shortly after Black Monday) through January 2000.

    No. The way I see it, the thing to do is to begin investing the moment you decide you want to. That way you pique your imagination, your motivation and your returns.

    Five Ways to Get Better Results in 2012

    Here are five tips to help you get started:

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  • High-Frequency Trading Could Cause Another Flash Crash The threat of another flash crash caused by high-frequency trading is as great as ever.

    And the next flash crash could be much worse than the one that shocked investors in May 2010.

    Although the Securities and Exchange Commission (SEC) has taken some steps to prevent another flash crash caused by high-frequency trading (HFT), some experts question whether the additional disclosure and "circuit-breakers" designed to prevent big, sudden price moves will make a difference.

    "Those things won't prevent another flash crash - they can't," said Money Morning Capital Waves Strategist Shah Gilani. "All they will do is soften the move."

    The real issue, Gilani said, lies with the computers that execute the trades - thousands of them in milliseconds.

    HFT has changed the nature of the stock market since these trades now account for between 60% and 70% of the transactions on the U.S. stock exchanges.

    "You can't stop a flash crash unless you stop the computers from doing what they're programmed to do. And that's not being addressed," Gilani said. "The SEC is looking at keeping the ship from sinking, not stopping it from hitting icebergs."

    HFT's heavy volume and high speed made it the prime suspect in the flash crash of 2010, when the Dow Jones Industrial Average plunged more than 600 points in five minutes, before recovering almost as quickly.

    Mini Flash Crashes

    Since then, the frequent occurrence of mini flash crashes - when a single stock or exchange-traded fund experiences a steep and rapid drop in price that quickly reverses - have served as nagging reminders of the vulnerability of the system to such events.

    "It's like seeing cracks in a dam," James J. Angel, professor at the McDonough School of Business atGeorgetown University told The New York Times. "One day, I don't know when, there will be another earthquake."

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