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Danger: Resist the Temptation to Chase Stock Prices

stock prices

The week running up to Easter ended with a punk jobs report that punctuated a first quarter filled with a stream of consistently bad economic data.

March nonfarm payrolls grew by only 126,000, far below consensus estimates of 225,000. Worse, 69,000 jobs were subtracted from January's and February's tallies. The unemployment rate stayed at 5.5% only because the job participation rate jumped back up to its lowest level since 1978.

And while the cock-eyed optimists who are waiting for the economy and the markets to reach escape velocity like Vladimir and Estragon are still waiting for Godot were rushing to blame the number on the weather, the government reported that 182,000 people reported they couldn't get to work because of the weather in March - in line with historical norms.

It isn't the weather that is hurting the economy...

Stock Market Futures Down Today on New Oil Price

Stock market futures

Good morning! Stock market futures today forecast a 59-point decrease from Friday's close on concerns about growth in Japan and a lackluster oil price forecast.

What to watch today: Investors will keep an eye on oil prices after Morgan Stanley (NYSE: MS) slashed its oil forecast through the year 2019. The investment bank predicted that the global energy markets would hit its oversupply peak in the second quarter of 2015, fueled by OPEC's decision not to reduce production.

Here's the other stock market news you need today - including your "Money Morning Tip of the Day" - to make it a profitable Monday...

It's Time to "Follow the Money" Into This Stock

If you’re looking for the very best profit plays in this toppy market, here’s my advice.
Follow the money.
There’s no "signal" more heartening than en masse insider buying - or finding out that big investments are being made by the handful of institutional players with a proven ability for finding big winners.
It’s even better when you see that the Big Boys are making those investments in stocks the rest of Wall Street wouldn’t even think of touching.
This “even better” scenario is just what’s happening with this natural resources play

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.

To continue reading please click here...

Stock Splits Suddenly Getting Cold Shoulder From Wall Street

Once upon a time, Wall Street loved stock splits.

Back in 1997, 102 companies in the S&P 500 did a stock split. Last year there were just 16 down from an average of 35 a year from 2004-2007.

This year there have been just four as of May with four more expected by the end of July.

So why has Wall Street turned a cold shoulder to stock splits?

It may be because strictly speaking, shareholders gain nothing from a stock split.

When a stock splits at 2-1, for instance, it simply doubles the number of shares while cutting the price in half.

So an investor who holds 50 shares of Company X at $100 a share ends up with 100 shares at $50.

Still, many investors see stock splits as a sign a company is doing well.

In addition, the more affordable price often helps attract more retail investors, and the increase in shares improves liquidity, making the stock easier to trade.

Historically, companies would consider a stock split whenever its stock price climbed over a certain level, such as $100 a share. But attitudes have changed.

"Nobody is scared of a $100 stock or a Google or Apple at $600," Howard Silverblatt, senior analyst art S&P, told MSN Money.

But what changed Wall Street's mind?

One explanation is that many corporate executives today see a lofty stock price as a status symbol, particularly the younger CEOs of tech companies. And some company heads point to the questionable benefits of a stock split.

"Splitting is nothing more than window dressing," Chris Arnold, a spokesman for Chipotle Mexican Grill (NYSE: CMG), told Bloomberg Businessweek. Chipotle has never split its stock, which trades at about $400 share.

But some analysts think sentiment against stock splits started with the collapse of the dot-com bubble in 2000 and deepened with the 2008 financial meltdown.

"There's a reluctance to split a stock after such a decline is still fresh in the collective memory of management," Doug Ramsey, the Minneapolis-based director of research at Leuthold Group LLC, explained to Bloomberg. "A stock split is just an accounting mechanism, but the psychology behind it is, you're not going to do it unless you're confident you're going to trade at an elevated level."

The Consequences of Fewer Stock Splits

Given the mostly cosmetic nature of stock splits, you might think having fewer of them wouldn't matter. But the lack of stock splits has had several consequences.

To continue reading, please click here...

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...

To continue reading, please click here...

The Best "Buy" of the New Dividend Aristocrats

If you are looking for a steady stream of safe dividends in today's troubled markets, the list of "Dividend Aristocrats" is a good place to start.

Compiled and tracked by Standard & Poor's, Dividend Aristocrats are companies that have consistently increased their dividend payouts for 25 consecutive years.

Currently, there are 51 of them, including the 10 new Dividend Aristocrats added this year.

To continue reading, please click here...

The Death of the "Dollar Carry Trade"

By maintaining a F ederal F unds rate below the 0.25% level - and injecting $600 billion into the banking system through a second round of quantitative easing - the U.S. Federal Reserve has orchestrated a bubble-like surge in commodity prices, an uptick in global inflation and a historic resurgence in U.S. stock prices.

The low-interest-rate strategy has enabled the U.S. central bank to achieve another important objective - a massive depreciation in the value of the U.S. dollar.

There's only one problem with all these "successes" the Fed has achieved: If the dollar ever rebounds, this elaborate financial structure the central bank has engineered will be exposed for what it really is - a shaky arrangement that will collapse like the house of cards that it is.

The fallout from such a collapse could be widespread and painful - especially for investors who've been riding the so-called "dollar carry trade" to major profits.

There's one way to profit from Gilani's newest prediction. Read on to find out all about it.

Read More…

U.S. Investors Don't Put Much Faith in Bull Market

Today, March 9, the U.S bull market in stocks celebrates its second birthday.

But what everyone really wants to know is this: A year from now, will we be celebrating again - or will we be trying to outrun the bear?

So far, 2011 is delivering on that bull market promise. February represented the third straight month of U.S. stock-market gains.

Read More…

Will Extreme Volatility Actually Stabilize the Markets?

Stocks tumbled across the board last week like a pair of dice rumbling around a craps table, rocked by extreme volatility.  Just when it looked like they were rolling up the unnerving loss of the critical 200-day average on Thursday, bulls' returned to the fray and pushed the major indexes just barely back into safe territory.

But is the market really safe? It's currently at the bottom of its multi-week range, so this is the time to get bullish again if you think the range will remain in force. The S&P 500 Index actually touched its February 2010 low on Friday before rebounding, which will give all the range-traders a green light.

Click Here to Find Out What Last Week's Extreme Volatility Means for the Markets...

Heavy-Handed Politics Could Boost Bank Reform, Stock Prices and the Economy

Defenders of Goldman Sachs Group Inc. (NYSE: GS) say the civil fraud charges the U.S. Securities and Exchange Commission has levied against the investment-banking giant are without foundation, and are politically timed to push President Barack Obama's bank-reform agenda.

In his Cooper Union speech to Wall Street and the American public yesterday (Thursday), President Obama took pointed aim at opponents of his bank-reform agenda by stating: "Unless your products depend on bilking people, there's little to fear from these reforms." 

Whether or not the timing of the Goldman Sachs fraud case was politically motivated, or whether or not President Obama was referring to Goldman with his "bilking" comment, one thing is for sure: The president and his administration are taking the reform fight to the Street.

At stake in this fight is the future of our capital markets, the health of the U.S. economy and the direction of the U.S. stock market.

To see how the Obama bank-reform push could perpetuate the bull market, please read on...

To see how the Obama bank-reform push could perpetuate the bull market, please read on...