Monday, September 30, 2013

Hot Financial Companies To Own For 2014

Efforts by members of Congress to slow the Department of Labor’s reproposal of its fiduciary rule will have little to no effect, Phyllis Borzi, assistant secretary of DOL’s Employee Benefit Security Administration, said Tuesday.

A bill introduced by Rep. Ann Wagner, R-Mo., that will be marked up by the House Financial Services Committee on Wednesday, requires that the DOL wait to publish its fiduciary rule for 60 days after the Securities and Exchange Commission releases its fiduciary rule proposal.

When asked after her remarks at the Insured Retirement Institute's regulatory conference in Washington if DOL was going to wait for the SEC to publish its rule, Borzi (right) exclaimed: “Of course not.”

DOL, Borzi told reporters, “began working on its rule” to amend the definition of fiduciary under the Employee Retirement Income Security Act “before Dodd-Frank.” DOL, she said, is “coordinating very closely with the SEC to make sure we don’t have outright conflicts," adding that it was ludicrous for lawmakers to think that "one statute is more important than another."

Hot Financial Companies To Own For 2014: HCC Insurance Holdings Inc. (HCC)

HCC Insurance Holdings, Inc. underwrites non-correlated specialty insurance products worldwide. The company operates in five segments: U.S. Property & Casualty, Professional Liability, Accident & Health, U.S. Surety & Credit, and International. The U.S. Property & Casualty segment provides aviation, small account errors and omissions liability (E&O), public risk, contingency, disability, residual value, employment practices liability (EPLI), technical property, primary and excess casualty, and brown water marine insurance products, as well as title and mortgage reinsurance products in the United States. The Professional Liability segment offers directors� and officers� (D&O) liability, large account E&O liability, fiduciary liability, fidelity and bankers blanket bonds, and EPLI for the United States and International-based policyholders. The Accident & Health segment provides medical stop-loss, short-term domestic and international medical, HMO reinsurance, and medical excess coverages in the United States. The U.S. Surety & Credit segment offers contract surety bonds, commercial surety bonds, and bail bonds; credit insurance policies for export trade transactions and structured trade transactions; and political risk and letters of credit insurance products. The International segment provides energy, property treaty, liability, surety, credit, direct and facultative property, ocean marine, accident and health, and other smaller product lines for international customers. The company markets its products directly to consumers, as well as through a network of independent agents and brokers, producers, and managing general agents. HCC Insurance Holdings, Inc. was founded in 1974 and is headquartered in Houston, Texas.

Advisors' Opinion:
  • [By WWW.GURUFOCUS.COM]

    HCC Insurance Holdings Inc. (HCC) underwrites non-correlated specialty insurance products worldwide. The company operates in five segments: U.S. Property and Casualty, Professional Liability, Accident and Health, U.S. Aug. 21, the company increased its quarterly dividend 36% to $0.225 per share. The dividend is payable October 1, 2013 and will be paid on or about Oct. 15, 2013. The yield based on the new payout is 2.1%.

Hot Financial Companies To Own For 2014: LoopNet Inc.(LOOP)

LoopNet, Inc. owns and operates an online marketplace for commercial real estate in the United States. The company?s online marketplace, LoopNet.com enables commercial real estate agents working on behalf of property owners and landlords to list properties for sale or for lease, and submit detailed information on property listings, including descriptions, financial and tenant information, photographs, and property characteristics to find a buyer or tenant. As of December 31, 2011, the LoopNet online marketplace contained approximately 820,391 listings. It also operates BizBuySell and BizQuest online marketplaces that enable business owners, sellers, and brokers to list and search for operating businesses for sale; LoopLink, an online real estate marketing and database services suite that enables commercial real estate firms to showcase their available properties on the LoopNet marketplace and brokerage firm?s own Website using the company?s hosted search software. In ad dition, the company provides Property Comps, a database to review precedent sales data to inform commercial real estate valuation analysis based on asset type, asking and sale price, sale date, property address, and size; and Property Facts that aggregates data from the LoopNet marketplace, LoopNet research, independent data providers, public records, and LoopNet members to deliver data on properties. Further, it offers advertising and lead generation; operates LandsofAmerica and LandAndFarm online marketplaces for rural land for sale; and offers REApplications that provides an integrated suite of commercial brokerage automation software. The company was formerly known as Loop Ventures, Inc. and changed its name to LoopNet, Inc. in November 1998. LoopNet, Inc. was incorporated in 1997 and is headquartered in San Francisco, California.

Top Stocks To Buy Right Now: United Overseas Australia Ltd (EH5.SI)

United Overseas Australia Limited engages in the construction, development, and resale of residential and commercial land and buildings primarily in Australia and Malaysia. It is also involved in the investment of rental properties; and investment of UOA real estate investment trust. The company, formerly known as United Overseas Securities Limited, was founded in 1987 and is based in Osborne Park, Australia.

Hot Financial Companies To Own For 2014: Calamos Asset Management Inc.(CLMS)

Calamos Asset Management Inc. is a publicly owned investment manager. The firm provides investment advisory services to individuals including high net worth individuals, and institutions. It also manages accounts for family offices and private foundations. The firm manages separate client-focused equity and fixed income for its clients. It also launches and manages equity, fixed income, and balanced mutual funds for its clients. The firm invests in the public equity and fixed income markets across the globe. It also invests in alternative investments markets. The firm primarily invests in growth stocks of large-cap, mid-cap, and small-cap companies to make its investments. For fixed income, it invests in high yield bonds. The firm employs qualitative and fundamental analysis with a top-down and bottom-up stock picking approach to make its investments. It benchmarks the performance of its equity portfolios against the MSCI Indices, Russell Indices, and S&P 500 Index and its fixed income investments against the BofA Merrill Lynch Global 300 Convertible Index, BofA Merrill Lynch All U.S. Convertibles Ex-Mandatory Index, and CS High Yield Index. Calamos Asset Management Inc. was founded in 1977 and is based in Naperville, Illinois.

Advisors' Opinion:
  • [By David Sterman]

     

    6. Calamos Asset Management (Nasdaq: CLMS) This asset manager's founder and CEO, John Calamos Sr., is a bit vexed right now. As I noted six weeks ago, he had been aggressively buying company stock. He kept doing so in late July and early August, buying more than $1 million more in stock at prices in the $10.50 to $10.75 range. Yet the market pullback has pushed this stock down below $10.

    Calamos is in the process of shifting resources away from poorly performing funds and toward higher-performing ones. Recent signs are promising, though it appears as though the firm's founder is the only believer in this turnaround thus far.

Hot Financial Companies To Own For 2014: Credit Suisse Group(CS)

Credit Suisse Group AG, together with its subsidiaries, operates as a financial services company. The company operates in three segments: Private Banking, Investment Banking, and Asset Management. The Private Banking segment offers advisory services and a range of wealth management solutions, including pension planning, life insurance products, tax planning, and wealth and inheritance advice for the high-net-worth and ultra-high-net-worth individuals. This segment also supplies banking products and services to affluent, high-net-worth and ultra-high-net-worth clients, and corporates and institutions. The Investment Banking segment provides investment banking and securities products and services to corporations, governments, pension funds, and institutions. Its products and services include debt and equity underwriting, sales and trading, mergers and acquisitions advice, divestitures, corporate sales, restructuring, and investment research. The Asset Management segment offe rs integrated investment solutions and services to institutions, governments, foundations and endowments, corporations, and individuals. It provides access to a range of investment classes across alternative investment, asset allocation, and traditional investment strategies. The company operates in Switzerland, Europe, the Middle East, Africa, the Americas, and the Asia Pacific. Credit Suisse Group AG was founded in 1856 and is headquartered in Zurich, Switzerland.

Advisors' Opinion:
  • [By Vaughan Scully, ,]

    Three of the fund's top 10 holdings��NG Groep (ING), BNP Paribas (Paris:BNP) (US:BNPQY), and Credit Suisse Group (CS)��re European financials that came into the fund beginning in early 2012, when the team began to sense the pessimism regarding the European banking sector was too extreme.

Sunday, September 29, 2013

Surprise! Big Banks Pass Self-Administered Stress Tests

A slew of big banks just passed another stress test, mandated under the Dodd-Frank reform law. This time, however, the tests weren't overseen by the Federal Reserve, as they were during last March's Comprehensive Capital Analysis and Review. These "mid-cycle" tests were both created and administered by the very same bank holding companies that took part in the Fed's test -- those with assets of $50 billion or more.

How did megabanks like Bank of America (NYSE: BAC  ) , Citigroup (NYSE: C  ) , JPMorgan Chase (NYSE: JPM  ) , and Wells Fargo (NYSE: WFC  ) fare with these self-generated, self-administered tests? Not surprisingly, they all passed with flying colors.

Surpassing achievements from the Fed's CCAR review
The tests are supposed to gauge the health of each institution under stressful scenarios generated by the banks themselves. The Fed will use the information gleaned from the tests to assist in its supervision of the banks, but is otherwise staying out of the picture.

Clearly, it is much easier to ace a test when you generate the template, and the banks named above all sailed through without a hitch. All used a severely stressful nine-quarter scenario in order to test their individual mettle, and all came out with robust Tier 1 common capital ratios. Wells Fargo emerged with a 10.3% cushion after suffering loan losses of nearly $30 billion, while JPMorgan still retained a ratio of 9.4% after a $32 billion hit.

B of A and Citi also triumphed -- the former with a capital ratio of 9.2% on $36.8 billion in losses, and the latter sporting a 9.4% capital cushion while enduring a loss of $43.1 billion.

As for the Tier 1 common stressed minimum values, things are looking better yet:

Tier 1 Common Minimum Capital Ratios

Bank

March 2013 CCAR

Mid-Cycle Results

Bank of America

6.04

8.4

Citigroup

8.22

9.1

JPMorgan

5.56

8.5

Wells Fargo

5.94

9.9

Sources: Bank presentations, Federal Reserve. 

Scenario differs slightly
Have banks really come that far, that fast? Except for Citi, the minimum capital ratios banks could expect to support under the severely adverse scenario are much higher now than they were at the end of last year.

It's true that banks have been working to bulk up their cushions. JPMorgan CEO Jamie Dimon noted that his bank expects to achieve a common ratio under Basel III of 9.5% by year's end, based on the latest rules put forth by the Fed this past July. In its second-quarter earnings summary, Bank of America also claims to have raised its Basel III common ratio to 9.6%, an increase from the prior quarter's 9.52%.

While the banks are definitely making headway, it's interesting that all four used a similar model for the projection of long-term interest rates -- namely, that they would be heading downward during the scenario timeline.

This is, of course, the opposite of what is now happening, as well as a deviation from the previous Fed-supervised stress test, which specifically mentioned that both corporate borrowing rates and mortgage rates were to rise during the scenario's timeline. Considering the effect rising rates are having on the mortgage refinance and origination business of the biggest banks -- especially Wells and JPMorgan -- using higher long-term rates may have been more realistic.

5 Best Small Cap Stocks To Buy For 2014

Still, this was a worthy exercise. Not only does it keep the issue of bank regulation and safety front and center, but it serves as a reminder of just how far the financial system has come since the crisis. Involving the banks in the creation of a stressful economic scenario, even if they give themselves a little break on the interest rate issue, keeps the remembrance of past mistakes fresh for the very institutions that need that timely reminder.

Banks Have Come a Long Way, Baby
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Saturday, September 28, 2013

Bull Of The Day: Kirkland's

You know what they say: Your home is your castle. Kirkland's, Inc. (KIRK) is perfectly situated to cash in on the growing trend of consumers spending on their homes again. This Zacks Rank No. 1 (Strong Buy) recently raised full-year guidance. Kirkland's operates 317 home decor stores in 35 states. Founded in Tennessee in 1966, its focus is on the Southeast. It carries home items such as framed art, mirrors, candles, lamps, accent rugs, and garden accessories, as well as seasonal merchandise.

Big Second-Quarter Earnings Beat

On Aug. 22, Kirkland's reported its second-quarter results and blew past the Zacks Consensus Estimate by 70%. Earnings were a loss of 3 cents compared to the Zacks Consensus, which was looking for a loss of 10 cents. Sales rose 6.7% to $97.1 million compared with the year-ago period. Gross margins rose to 36.7% on reduced promotions. While traffic remains a "challenge," the company believes it has a strong brand, which should extend recent gains into the second half of the year.

Raised Full-Year Guidance

After a better-than-expected second quarter, Kirkland's raised its full-year EPS guidance to the range of $0.80-$0.90 from $0.75-$0.85. Four estimates have been raised since the report, which has pushed the Zacks Consensus Estimate up to $0.91 from $0.83. The analysts are bullish as that is a penny above the new guidance range. That's earnings growth of 22.3% in fiscal 2013.

Long-Term CEO to Retire

One issue to keep an eye on is the search for a new president and CEO. In March 2013, the company announced that CEO and President Robert Alderson, who had been with the company for 27 years, was going to retire at the end of the fiscal year. In retail speak, that means Feb. 1, 2014. Analysts and investors can get jittery at the prospect of losing a long-time leader. But Kirkland's has given itself nearly a year to find a successor, which has calmed nerves. Look for an announcement on his replacement soon.

Cash Is King

Kirkland's ! is also one of those rare companies that has no debt. This is especially impressive for a retailer that is always opening new stores. As of the end of the second quarter, Kirkland's had $63 million in cash on hand.

Two-Year High

After the company beat and raised full-year guidance, shares spiked to two-year highs.

It's trading with a forward P/E of 21.3, but its price-to-sales ratio is just 0.7. A P/S under 1.0 usually designates value. For investors looking for ways to play the return to "nesting" and a focus on the home, Kirkland's just might be the retailer to zero in on.

Kirkland's: Free Stock Analysis Report (email registration required)

Source: Bull Of The Day: Kirkland's

Thursday, September 26, 2013

Upcoming Trial Data for Inovio and OncoSec Add to Market’s Interest in Electroporation

Recently presented data from a preclinical study performed using Inovio Pharmaceuticals' (NYSE: INO) DNA vaccine against the H7N9 strain of avian influenza (bird flu) garnered some interest and buying momentum in INO, although investors seemed even more impressed after the release of the peer-reviewed publication analyzing the data from 2 Phase I trials for Inovio's PENNVAX-B vaccine, which was delivered using Inovio's CELLECTRA electroporation device. PENNVAX induced a strong T-cell response in 89% of the patients that had received three doses of the vaccine plus a signaling protein called Interleukin-12, inducing a best-in-class immune system response against HIV.

In light of the data, INO is up 93% in the last month of trading and hit a recent 52-week high of $1.57/share. Although the stock has pulled back, investors who are bullish on the stock now have more detailed Phase I clinical data supporting their position.

Although the data are from Phase I trials, they demonstrate quite clearly that the delivery of DNA plasmids into mammalian cells via electroporation – in vivo – truly works as intended. This is exciting for biotech investors due to the broad range of possibilities introduced by DNA vaccination.

Another company that has benefitted from Inovio's newfound attention is OncoSec Medical (OTC: ONCS) – a newer "offshoot" company that uses a similar but distinctly different electroporation device known as the OncoSec Medical System (OMS) that is based on Inovio's technology. The specific amplitude and frequency of the OMS electroporation is calibrated such that plasmid delivery into solid tumor masses is fully optimized, while CELLECTRA electroporation is less specialized and focus more on the vaccination of skin cells. The cross-license agreement made between Inovio and Oncosec also covers the two devices for their distinctly different applications.

The two companies also have significant upside potential in the coming months based on catalysts for their most important development programs.

Inovio – Phase II Cervical Dysplasia Data for VGX-3100

The link between Human papillomavirus (HPV) and cervical cancer has been well established with past research, although significant unmet demand still remains for more effective vaccines to prevent cervical dysplasia caused by HPV in patients that already contracted the virus. Current treatment is limited to HPV prevention. The VGX-3100 program aims to prevent cervical cancer by inducing a strong immune response against precancerous cells that have been mutated by a HPV infection. The activated T-cells may be able to eliminate – or at least regress the cervical cancer.

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Phase II data for the VGX-3100 program is expected in the first quarter of 2014, which will provide more data on the extent of the immune response induced by the VGX-3100 DNA construct and the CELLECTRA electroporation device.

Inovio has already reached a market capitalization of $232 M at the time of writing, which limits the stock's upside but establishes Wall Street's initial confidence in the commercial viability of DNA vaccines. Given strong Phase II data, Inovio should be able to move above a $300 M valuation and stay there.

OncoSec – Phase II Melanoma Data for ImmunoPulse

ImmunoPulse is the name OncoSec uses to refer to the therapy that was developed using the OMS with a plasmid designed to code for Interleukin-12. IL-12, which was mentioned earlier, is a signaling protein that plays a vital role the body's natural immune system response. ImmunoPulse is currently being developed for three separate indications: late-stage melanoma, Merkel cell carcinoma (MCC), and cutaneous T-cell Lymphoma. These are all in Phase II development, although it's worth noting that the melanoma indication is the furthest developed of the three and has recently completed enrollment for its 25-patient trials.

In multiple past trials Interleukin-12 was demonstrated to be an efficacious anti-cancer therapy (particularly melanoma), although it was always constrained by its safety profile. Patients who received the most effective doses of recombinant IL-12 saw unacceptable hepatotoxicity, and other adverse side effects which prevented its widespread use by doctors. Through the use of plasmids, OncoSec is able to introduce similarly high levels of IL-12 into patients without any apparent signs of toxicity.

"OncoSec put ImmunoPulse through a 24-patient Phase I safety trial to determine the profile of plasmid interleukin-12 paired with electroporation with the Oncosec Medical System. Robust expression of IL-12 – as high as 2,813 pg/g (convertible to 2,813 ng/kg) was seen in patients who received the highest dosing of IL-12 plasmid at 1.6 mg/mL on day 11. Mean IL-12 expression in two three-patient cohorts receiving the highest dosage were  1,124 and 870 ng/kg respectively, surpassing the limits of recombinant IL-12 injections."

(Source)

Interim response data from the nearly-completed Phase II melanoma trial is expected in Q3 2013, while the full data is expected in Q4 2013 or Q1 2014. The market generally disregards Phase I data, implying that a continuation of the good results seen in Phase I trials with ImmunoPulse will draw significant attention to OncoSec and the commercial potential in melanoma, MCC and cutaneous lymphoma. In particular, investors are looking for significant responses in malignant melanoma tumors that are distant from the electroporation and IL-12 injection sites, which would imply that ImmunoPulse generates a systemic (rather than local) immune response. Since this is very difficult to achieve with tolerable doses of Interleukin-12, it's implied that ImmunoPulse will make IL-12 viable for oncologists treating late-stage melanoma patients that have subpar or compromised organ function.

OncoSec is trading at a $36.6 M valuation at the time of writing, which reflects the market's skepticism over the company's technology and commercial viability. Positive Phase II data is likely to have a bigger percentage-based impact on Oncosec's valuation, since it would put the company "on the radar" for larger biotech investors. This effect could double the stock pretty easily within the next year, although investors buying now are exposing themselves to a double-edged sword.


Tuesday, September 24, 2013

Big Questions Lurk in LTC’s Future

Long-term care specialists are at odds over what they believe the Long-Term Care Commission will submit to Congress on Thursday as part of its first set of recommendations to better ensure LTC coverage is available for the elderly and disabled.

After the Community Living Assistance Services and Supports (CLASS) Act was repealed by the American Taxpayer Relief Act, better known as the “fiscal-cliff” law, in January, the Long-Term Care bipartisan commission was set up.

The commission, which consists of 15 members appointed by Democratic and Republican congressional leaders and the White House, was then tasked with reporting to lawmakers by Sept. 12 on how to establish, implement and finance a “comprehensive, coordinated, and high-quality system that ensures the availability of long-term services and supports for individuals in need.”

Jesse Slome, executive director of the American Association for Long-Term Care Insurance, told ThinkAdvisor that at best, he believes the commission will recommend only a “superficial overview of the importance of the issue and the lack of a cohesive approach to dealing with it.” With only a few meetings under its belt, Slome says that it “would be foolhardy” for the commission to recommend legislation.

Rather, he expects the commission to “likely ask for an extension, some money and an opportunity to continue exploring.” Long-term care “simply remains an issue that is overlooked by politicians,” something he doesn’t see changing “anytime soon.”

But Chris Orestis, a long-term care specialist and former insurance industry lobbyist who is CEO of Life Care Funding, expects the commission’s report to “radically alter the ways in which long-term care is financed.”

He told ThinkAdvisor in an email message that "the aging population and longer life expectancies is putting too much pressure on Medicare and Medicaid to sustain," so he expects the commission’s report to recommend that “alternative forms of funding long-term care must be found and/or serious cuts and higher barriers to entry onto these programs will be necessary.”

LTC insurance “has not lived up to expectations,” Orestis argues, with proof of this being the major insurance companies such as MetLife, Prudential, UNUM and Guardian having “quit the market.” Those companies that are still in the business, like John Hancock and Genworth, are raising rates and cutting benefits, he says. LTC insurance “is, at this point, a niche market that primarily serves higher-net worth individuals who would probably not go onto Medicaid anyway.”

Orestis argues that there’s a need for “new innovations” in the LTC marketplace and that “private market solutions to find cost savings and new methods to fund long-term care must be sought out and encouraged.”

He added that programs such as “Veterans Aide & Attendance Benefits or converting life insurance policies into a Medicaid qualified long-term care benefit based on the law passed in Texas this year have been submitted to the commission as policy recommendations.”

---

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Saturday, September 21, 2013

What Are Factor Model ETFs?

Trackers and exchange traded funds (ETFs) that pursue a passive strategy of simply following a specified market or index have become extremely popular in recent years, as it has become common knowledge that classic stock picking does not always work.

A pure tracker that entails "buying a market," such as the S&P 500 or the FTSE in the U.K., has its disadvantages. Although highly transparent, investors are completely exposed to the market in question and all its vicissitudes. It is not surprising, therefore, that hybrid models have emerged that are still tracker ETFs, but are deliberately biased in one or more respects. These are often referred to as "factor ETFs."

The Workings of Factor ETFs
The concept behind a factor ETF is that by shifting away from "plain vanilla" trackers, one can improve the rate of return and/or risk level without getting into expensive and time-consuming stock picking. The shift is referred to as "bias" or "tilt." In other words, these products are not pure trackers; they deviate to some degree from simply going up and down with the specified market.

The following factor ETFs introduced in April 2013 demonstrate how these vehicles operate:

- iShares MSCI USA Size Factor ETF (NYSE:SIZE)

- iShares MSCI USA Momentum Factor ETF (NYSE:MTUM))

- iShares MSCI USA Value Factor ETF (NYSE:VLUE)

Each iShares ETF has a particular tilt, one biased toward small firms, another toward firms whose stock value is accelerating in price or gaining momentum, and a third toward stocks that may be undervalued by the market.

The size factor ETF from iShares focuses on U.S. large- and mid-capitalization stocks "with relatively smaller market capitalization" with the idea that smaller firms tend to be overlooked. The momentum factor ETF invests in stocks with accelerating price and volume, while the value factor ETF weights securities according to four accounting variables and compares these to the parent index. These three approaches "tilt" the fund away from exposure to your chosen index. These forms of bias all make financial sense, and if properly tuned, should provide a good quasi-tracker, but one that can outperform a pure buying-the-market vehicle.

How Effective Is All This Likely To Be?
These ETFs are fairly new, so there is not much of a track record. However, the logic is sound enough that a prudent investment could pay off. Make sure that you understand exactly how the products work. The more an ETF deviates from the pure index (benchmark risk), the more appropriate it may become for sophisticated and active investors.

There are various ways of using these concepts in practice. Atlas Capital, for instance, has offered a variant of the concept, "enhanced indexing," since the firm was founded seven years ago by Jonathan Tunney, CFA, in San Francisco. In separately managed accounts for large dollar amounts, it uses value, size and momentum, as well as short-term reversal. This latter term refers to return over the prior month, which tends to display negative serial correlation, whereas medium-term momentum displays positive serial correlation. The new Atlas ETFs use one factor per ETF and combine the separate approaches into a unified strategy. In other words, Atlas does not actually use the ETFs described above in their pure form, but instead has adapted the concept to its own portfolio of stocks, using a ranking system with regard to value, momentum, size and short-term reversal.

Atlas founder Tunney says the firm's factor model process enables it "to provide clients with portfolios that are liquid, transparent, low-cost and backed by years of academic research." Factor ETFs reduce the costs of traditional actively managed funds by providing a low-cost product that's still well-researched and can provide greater-than-market returns, he says.

These products are generally recommended, by the people offering them, for investors who seek exposure to other and different risk factors and "alternative beta." Nonetheless, until they gain acceptance, the factor ETFs face liquidity issues.

Some Other Market Offerings

Plenty of other factor ETFs are in the market, as they include any common market-wide drivers of security return. Apart from the offerings of Atlas and iShares, Schwab has "Fundamental Index" ETFs, using three fundamental measures of a company, namely adjusted sales, retained cash flow and dividends plus buybacks. Its three products are FNDB, FNDX and FNDA.

FlexShares, the ETF unit of Northern Trust, launched two new fund products last year. They are based on a multi-factor model approach intended to provide a heavier emphasis on international small caps and value stocks. The products are the FlexShares Morningstar Developed Markets Ex-U.S. Factor Tilt Index Fund (TLTD) and the FlexShares Morningstar Emerging Markets Factor Tilt Index Fund (TLTE).

The Bottom Line
ETFs and trackers are here to stay, given that it is pretty much accepted that paying someone to simply "beat an index" can be counterproductive. Pure trackers have their disadvantages, however, as there is no protection from market movements. New factor ETFs offer some compromise with a bit of "tilt" away from an index. If you are more experienced or adventurous, factor ETFs may make sense as a form of diversification and potential means of enriching your portfolio.

Thursday, September 19, 2013

Jefferies Upgrades Interpublic Group to “Hold” (IPG)

Jefferies analysts noted that Interpublic Group of Companies Inc (IPG) offers some upside, but certain factors will continue to weigh down the stock. As such, the analysts upgraded the marketing and advertising company on Wednesday, but only with a tepid rating.

The analysts upgraded IPG from “Underperform” to “Hold” and now see shares reaching $17.20, up from the previous target of $11. This new price target suggests a slight upside to the stock’s Tuesday closing price of $16.92.

Jefferies analyst David Reynolds commented, “There’s a lot to be said for IPG, robust earnings growth profile, plays well into a ‘growth’ ad spend market and perhaps it remains the key beneficiary of all things POG. Yet, issues around North American profitability and developing economy scale continue to weigh. Richly valued and thus only c.2% upside to the ‘old normal’ and demonstrably bullish 16.7x forward earnings, we think warrants a HOLD. We set our new PT at US$17.20, 16.7x FY14 earnings.”

Interpublic Group shares were inactive during pre-market trading on Wednesday. The stock is up 53.54% year-to-date.

Monday, September 16, 2013

UBS Picks Large Cap Biotechnology Stocks to Outperform the Rest of 2013

Even though the equity strategy team at UBS has downgraded U.S. equities to Neutral from Outperform, they remain very positive on large cap biotechnology names. Acknowledging in their recent report that the U.S. downgrade was as much a valuation call as anything, they also feel that there is a degree of event risk to U.S. stocks that may be less likely to affect the biotechnology sector.

Despite relative outperformance of the large cap biotech group over the past two years, the UBS team sees the new product cycles and attendant mid- to long-term growth as a strong basis for valuation. In fact, they note that valuation is currently at the low end of historical ranges. Here are the top large cap biotechnology stocks to buy from UBS.

Alexion Pharmaceuticals Inc. (NASDAQ: ALXN) has been on fire through the summer and continues to be a target of takeover rumors. While the company only has one drug on the market, Soliris, which treats two rare diseases, big pharmaceutical companies may indeed have Alexion in their sights. The UBS price target for the stock is $126. The Thomson/First Call estimate is $122.

Amgen Inc. (NASDAQ: AMGN) is a company doing the acquiring. The company recently completed a $10.4 billion purchase of Onyx Pharmaceuticals Inc. (NASDAQ: ONYX) to add its cancer drug Kyprolis to its already sprawling portfolio. UBS has a $124 price target on the stock. The consensus target is at $123. Investors are paid a 1.7% dividend.

Cubist Pharmaceuticals Inc. (NASDAQ: CBST) is another top stock to buy making acquisitions. It recently received antitrust clearance for its purchase of Trius Pharmaceutical. The acquisition strengthens its already strong antibiotic franchise. UBS has a $70 price target, and the consensus is placed at $65.

Gilead Sciences Inc. (NASDAQ: GILD) is one of the high conviction names to buy at UBS. Its leading position in both the hepatitis C and HIV franchises makes the stock a top portfolio holding for clients. The UBS price target is pegged at $72, while the consensus target is $72.50.

InterMune Inc. (NASDAQ: ITMN) continues to soar on the strength of global sales of its top drug Esbriet. The company is still seeking FDA approval to sell Esbriet in the United States. Before approval can take place, the company is awaiting top-line results from the phase 3 ASCEND study. InterMune expects to release these results during the second quarter of 2014. This could be a huge catalyst. UBS has a $15 price target, which should rise soon, and the consensus is at $16.

Medivation Inc. (NASDAQ: MDVN) is a top stock to buy and makes the UBS Key Call list as well. The company expects to present top line phase 3 data from the crucial PREVAIL trial of Xtandi in castration-resistant metastatic prostate cancer. UBS is highly confident the trials will prove successful. Its price target for the stock is $74, and the consensus target is $69.50.

Puma Biotechnology Inc. (NYSE: PBYI) is a stock that UBS views as having multiple catalysts. The analysts are positive on the potential for their cancer drug neratinib to demonstrate positive data in neoadjuvant breast, as well as specific genetic mutations for other cancers. Success in either area may lead to strong upside for the stock. The UBS price target is $61, while consensus is at $62.50.

While very upbeat on the sector as a whole, UBS was very cautious on sell-rated Ironwood Pharmaceuticals, Inc (NASDAQ: IRWD) and ImmunoGen Inc. (NASDAQ: IMGN). Neutral-rated Vertex Pharmaceuticals Inc. (NASDAQ: VRTX) and Seattle Genetics Inc. (NASDAQ: SGEN) were also viewed with a skeptical eye.

Large cap biotechnology has had a strong two years, and investors in the sector have been rewarded well. Given the strong move up in the stocks and the overall market’s strength, investors may want to scale into positions or wait for a market pullback to buy. September is traditionally a shaky month for the stock market, and this year may prove to be no exception.

Friday, September 13, 2013

Top Financial Companies To Buy Right Now

Midwest retail shopping center operator Inland Real Estate (NYSE: IRC  ) entered into an agreement to buy out for $121 million cash the 50% interest in the�IN Retail Fund that it doesn't already own.

The fund operates�13 shopping centers, including 11 in the Chicagoland area, representing approximately 2.3 million square feet of gross leasable space. The stake Inland is purchasing is currently held by the�New York State Teachers' Retirement System and the total value of the properties are estimated at $395.6 million.�As of March 31, the portfolio was 97.5% leased and financial occupancy of the portfolio was 93.4%.

Noting the joint venture between the real estate investment trust and NYSTRS was formed back in 2004, Inland Real Estate President and CEO�Mark Zalatoris said: "This venture has been a capital-efficient way for the Company to acquire premier retail assets while enhancing our yield on investment. However, the opportunity to acquire NYSTRS's interest at this time advances our strategic goals to increase the size and quality of our consolidated portfolio, simplify our ownership structure and strengthen our balance sheet."

Top Financial Companies To Buy Right Now: The Hanover Insurance Group Inc.(THG)

The Hanover Insurance Group, Inc., through its subsidiaries, underwrites commercial and personal property, and casualty insurance coverage in the United States. It operates in three segments: Commercial Lines, Personal Lines, and Other Property and Casualty. The Commercial Lines segment provides coverage for commercial multiple peril; commercial automobile; workers? compensation; and other commercial coverages, including specialty program business, inland marine, and bonds, as well as umbrella, general liability, fire, specialty property, and professional and management liability. The Personal Lines segment offers coverage for personal automobile, homeowners, and other personal lines, such as inland marine, umbrella, fire, personal watercraft, and earthquake. The Other Property and Casualty segment provides investment advisory services; and manages assets for unaffiliated institutions, such as insurance companies, retirement plans, and foundations. The company sells its p roducts and services through a network of independent agents. The Hanover Insurance Group, Inc. was founded in 1844 and is headquartered in Worcester, Massachusetts.

Top Financial Companies To Buy Right Now: Annapolis Bancorp Inc.(ANNB)

Annapolis Bancorp, Inc. operates as a bank holding company for BankAnnapolis that provides commercial and retail banking services to small businesses, professional concerns, and individuals in Maryland. It accepts various deposit products, including transaction, savings, money market, individual retirement, saving accounts, checking accounts, and NOW accounts, as well as certificates of deposits and time deposits. The company also offers loan products comprising commercial loans, commercial real estate loans, construction loans, one- to four-family residential mortgage loans, home equity loans, and letters of credit; and consumer loans, such as personal lines of credit, as well as generally fixed rate installment loans secured by new or used automobiles, and new or used boats; and loans secured by deposit accounts. In addition, it provides cash management services, which include account analysis, remote deposit capture, merchant services, and a range of deposit products. T he company operates six branches in Anne Arundel County, Maryland; and one branch located in Kent Island in Queen Anne?s County, Maryland. Annapolis Bancorp, Inc. was founded in 1988 and is headquartered in Annapolis, Maryland.

Top 5 Clean Energy Companies To Invest In Right Now: Citizens Inc (CIA)

Citizens, Inc. (Citizens), incorporated on November 8, 1977, is an insurance holding company serving the life insurance needs of individuals in the United States. The Company operates in three segments: Life Insurance, Home Service and Other Non-insurance Enterprises. Its core insurance operations include issuing and servicing the United States Dollar-denominated ordinary whole life insurance and endowment policies predominantly to high net worth, high income foreign residents, principally in Latin America and the Pacific Rim, through independent marketing consultants; ordinary whole life insurance policies to middle income households concentrated in the midwest and southern United States through independent marketing consultants, and final expense and limited liability property policies to middle and lower income households in Louisiana, Arkansas, and Mississippi through employee and independent agents in its home service distribution channel.

Life Insurance

The Company�� Life Insurance segment issues ordinary whole life insurance domestically and in United States Dollar-denominated amounts to foreign residents. These contracts are designed to provide a fixed amount of insurance coverage over the life of the insured. Additionally, endowment contracts are issued by the Company, which are principally accumulation contracts that incorporate an element of life insurance protection. The Company operates the segment through its subsidiaries: CICA Life Insurance Company of America (CICA) and Citizens National Life Insurance Company (CNLIC).

The Company offers several ordinary whole life insurance and endowment products designed to meet the needs of its non-United States policy owners. Its domestic life insurance products focus primarily on living needs and provide benefits focused toward accumulating money for the policyowner. The Company�� life insurance products are principally designed to address the insured�� concern about outliving his or her monthly income,! while at the same time providing death benefits. The primary purpose of its product portfolio is to help the insured create capital for needs, such as retirement income, children's higher education funds, business opportunities, emergencies and health care needs.

Home Service Insurance

The Company operates in the Home Service market through its subsidiaries Security Plan Life Insurance Company (SPLIC) and Security Plan Fire Insurance Company (SPFIC), and focus on the life insurance needs of the middle and lower income markets, primarily in Louisiana, Mississippi and Arkansas. Its home service insurance products consist primarily of small face amount ordinary whole life and pre-need policies, which are designed to fund final expenses for the insured, primarily consisting of funeral and burial costs.

Other Non-Insurance Enterprises

Other Non-insurance Enterprises includes Computing Technology, Inc., which provides data processing services to the Company, and Insurance Investors, Inc., which provides aviation transportation to the Company. This segment also includes the results of Citizens, Inc., the parent Company.

Top Financial Companies To Buy Right Now: Stamford Land Corporation Ltd (H07.SI)

Stamford Land Corporation Ltd, an investment holding company, owns and operates a portfolio of luxury hotels in Australia, Singapore, and New Zealand. It operates hotels and resorts under the Stamford Grand North Ryde, Sir Stamford Circular Quay, Stamford Plaza Sydney Airport, Stamford Grand Adelaide, Stamford Plaza Adelaide, Stamford Plaza Melbourne, Stamford Plaza Brisbane, and Stamford Plaza Auckland names. It also engages in the investment, construction, development, and trading of residential apartments, and retail and commercial buildings. In addition, the company is involved in providing travel agency services; importing, exporting, and dealing in wall coverings, interior decorations, and furnishing products; and offering management and consultancy services. Stamford Land Corporation Ltd is based in Singapore.

Top Financial Companies To Buy Right Now: Legal & General Gp(LGEN.L)

Legal & General Group Plc provides risk, savings, and investment management products in the United Kingdom, the United States, France, the Netherlands, and internationally. The company?s Risk segment offers individual and group protection, individual and bulk purchase annuities, and general insurance products. This segment also involves in estate agency and the housing related business conducted through its regulated mortgage network. The company?s Savings segment provides non profit investment bonds; non profit pensions, including SIPPs; individual savings accounts; investment bonds; pensions; retail unit trusts; structured products; and various with-profit products. Legal & General Group?s Investment Management segment involves in the institutional fund management business comprising index funds, fixed income funds, risk management solutions, and property related products, as well as private equity. The company also offers term assurance, wealth management, and unit-l inked savings products. Legal & General Group Plc was founded in 1836 and is based in London, the United Kingdom.

Top Financial Companies To Buy Right Now: Commerce Bancshares Inc.(CBSH)

Commerce Bancshares, Inc. operates as the bank holding company for Commerce Bank, N.A. that provides various general banking services to individuals and businesses. It operates in three segments: Consumer, Commercial, and Wealth. The Consumer segment includes the retail branch network, consumer installment lending, personal mortgage banking, consumer debit and credit bank card activities, and student lending. The Commercial segment provides various corporate lending, merchant and commercial bank card products, leasing, and international services, as well as business and government deposit and cash management services. The Wealth segment offers traditional trust and estate tax planning services, brokerage services, and advisory and discretionary investment portfolio management services to personal and institutional corporate customers. This segment also manages a family of proprietary mutual funds, which are available for sale to trust and general retail customers. The comp any, through its other non-banking subsidiaries, involves in underwriting credit life and credit accident, and health insurance; selling property and casualty insurance; private equity investment; securities brokerage; mortgage banking; and leasing activities. It serves customers through a network of branches and ATM machines, online banking, and a central contact center from approximately 370 locations in Missouri, Kansas, Illinois, Oklahoma, and Colorado. Commerce Bancshares, Inc. was founded in 1966 and is headquartered in Kansas City, Missouri.

Top Financial Companies To Buy Right Now: Credit Suisse Group(CS)

Credit Suisse Group AG, together with its subsidiaries, operates as a financial services company. The company operates in three segments: Private Banking, Investment Banking, and Asset Management. The Private Banking segment offers advisory services and a range of wealth management solutions, including pension planning, life insurance products, tax planning, and wealth and inheritance advice for the high-net-worth and ultra-high-net-worth individuals. This segment also supplies banking products and services to affluent, high-net-worth and ultra-high-net-worth clients, and corporates and institutions. The Investment Banking segment provides investment banking and securities products and services to corporations, governments, pension funds, and institutions. Its products and services include debt and equity underwriting, sales and trading, mergers and acquisitions advice, divestitures, corporate sales, restructuring, and investment research. The Asset Management segment offe rs integrated investment solutions and services to institutions, governments, foundations and endowments, corporations, and individuals. It provides access to a range of investment classes across alternative investment, asset allocation, and traditional investment strategies. The company operates in Switzerland, Europe, the Middle East, Africa, the Americas, and the Asia Pacific. Credit Suisse Group AG was founded in 1856 and is headquartered in Zurich, Switzerland.

Advisors' Opinion:
  • [By Louis Navellier]

    Credit Suisse (NYSE:CS) is known for providing advisory services, solutions and products to companies, institutional clients and private clients globally. CS stock’s yearly performance has been a sore spot for investors, having dropped more than 40%.

Top Financial Companies To Buy Right Now: Union Bankshares Inc.(UNB)

Union Bankshares, Inc. operates as the bank holding company for Union Bank, which provides commercial and retail banking services in northern Vermont and northwestern New Hampshire. Its deposit products include personal and business checking, NOW, savings, money market, individual retirement/SEP/KEOGH, and health savings accounts, as well as certificates of deposit. The company?s retail loan portfolio consists primarily of residential mortgage loans, construction loans, home equity loans or lines of credit, traditional installment loans, and personal lines of credit; commercial loan portfolio comprises term loans, lines of credit, commercial construction loans, commercial and multi-family real estate loans, loans for plant and equipment, working capital, real estate renovation, and other business purposes; and municipal loan portfolio includes term loans and construction financing, as well as SBA guaranteed and home improvement loans, and overdraft checking privileges. It also offers online cash management services, including account reconciliation, credit card depository, automated clearing house origination, wire transfers, and night depository; and other services, such as standby letters of credit, travelers or bank checks, and safe deposit boxes. In addition, the company provides merchant credit card, automated teller machine (ATM), telephone and Internet banking, and trust and asset management services, as well as debit and ATM cards. Union Bankshares, Inc. offers its retail banking services to individuals; and commercial banking services to small and medium-sized corporations, partnerships, sole proprietorships, nonprofit organizations, local municipalities, and school districts. As of July 20, 2011, it operated 13 banking offices, a loan center, and 29 ATM facilities in Vermont; and 4 branches and ATM facilities in New Hampshire. The company was founded in 1891 and is headquartered in Morrisville, Vermont.

Tuesday, September 10, 2013

Hussman Funds - The Lesson of the Coming Decade

We continue to observe conditions that fall within the most negative 5% of historical instances, and these conditions (not any inherent preference toward bearishness) are the reason we hold to a defensive outlook here. The concept of a "broken speculative peak" is relevant – our main concern being that risk premiums have been driven to remarkably thin levels, and we are presently observing market action that suggests upward pressure on those risk premiums. As I've often noted, a severe market decline is really nothing more than a spike in risk premiums from previously inadequate levels.

As a simple measure of this combination – rich valuations coupled with upward pressures on risk premiums and competing yields – it's worth considering the current Shiller P/E near 24 (S&P 500 divided by the 10-year average of inflation-adjusted earnings) in the context of rising yields on competing securities. Both the Dow Jones Utility Average and the Dow Jones Corporate Bond Average are down more than 5% from their recent 26-week highs. The last time we saw this combination of weakness in interest-sensitive sectors with the Shiller P/E even above 18 was in September 2008, just before the market collapsed that year. We observed a similar deterioration following overvalued, overbought, overbullish syndromes in January 2000 (though be aware that it took several more months of top formation for the market to decline in earnest) and June-September 1987. This is certainly not the only concern that we have at present, but it illustrates our discomfort with speculative risk-taking here.

As a side note, we've seen some arguments disputing the relevance of the Shiller P/E, suggesting that the accounting treatment of writeoffs in recent decades has made this measure obsolete. This might be a more compelling view if other valuation measures such as S&P 500 price/revenue, price/dividend, price/book, and market capitalization to GDP did not all presently indicate exactly the same range of overvaluation a! s the Shiller P/E does. One of the more intellectually distressing arguments on this front suggested replacing S&P 500 earnings with NIPA (National Income and Product Accounts) profit figures in the calculation of the Shiller P/E. This is an apples-to-oranges calculation, as NIPA figures measure economy-wide profits in dollars and are neither restricted to the S&P 500 nor include the per-share adjustments that index earnings do. Still, one can see why the substitution is superficially attractive: the ratio of NIPA profits to Shiller earnings has surged to the highest level in history in recent years, mirroring similarly elevated profit margins. Unfortunately, even much less breathtaking elevations in NIPA profits / Shiller earnings in the past have been regularly followed by weak subsequent growth in NIPA profits, as profit margins retreat. Moreover, the substitution of NIPA profits into the Shiller calculation substantially weakens, rather than strengthens, its relationship with subsequent S&P 500 total returns.

In any event, we refer to the Shiller P/E mainly because it is an easily accessible shorthand measure that is simple to obtain and calculate. As detailed in Investment, Speculation, Valuation and Tinker Bell, there are numerous other approaches that have a roughly 90% correlation with subsequent 10-year market returns, while many popular approaches (such as the Fed Model) have very little relationship to subsequent returns at all.

On the subject of economy-wide measures, the chart below shows the market value of U.S. nonfinancial equities (from Federal Reserve Z.1 Flow of Funds data) divided by nominal GDP, and the subsequent 10-year S&P 500 annual total return (nominal, right scale, inverted). The present ratio of equity market value to GDP is consistent with an expected 10-year nominal S&P 500 total return of about 3%, which is about the same figure one obtains using the Shiller P/E and other historically reliable measures. Nearly all of this total return can be expected to come! from div! idend income, suggesting that the S&P 500 index will be little changed, a decade from now, from present levels.

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All of this provides a good opportunity to reiterate that profits as a share of GDP remain nearly 70% above their historical norms; that cyclical variations in profits/GDP move closely and inversely with the combined total of government and household savings as a share of GDP; and that elevated profits/GDP are inversely correlated with subsequent growth in profits over the following 4-year period.

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A long-term perspective on intermediate-term discipline

A few weeks ago, in The Road to Easy Street I noted that even with the additional exclusions that we've introduced in recent years, overvalued, overbought, overbullish conditions sufficient to warrant our strongest defensive outlook have emerged about 5% of the time since 1940. These hostile conditions have historically been associated with average market losses on the order of 40-50% on an annualized basis.

The chart below expands on those comments, showing the cumulative performance of the S&P 500 when our estimates of the market Sharpe ratio were zero or negative (about 37% of history), compared with periods when they were positive (about 63% of history). The Sharpe ratio measures the expected return of the market in excess of Treasury bill yields, per unit of volatility. I've plotted the two lines on log-scale to highlight equivalent percentage changes.

This is not a chart of any specific investment strategy - only a partitioning of the data into two classifications to clarify my general approach to the investment process. As I've often noted, the worst estimated Sharpe ratios are generally associated with either overvaluation coupled with deteriorating market internals! , or the ! emergence of an overvalued, overbought, overbullish, rising-yield syndrome of conditions. A sequence of overvalued, overbought, overbullish, rising-yield conditions followed by deterioration in market internals is what I've termed a broken speculative peak and is what we presently observe. By contrast, the strongest Sharpe ratios tend to be associated with favorable (or at least reasonable) valuation coupled with a firming of market internals.

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The advance in the red line at the very right of this chart offers some perspective on the past few years. The fact is that particularly since late-2011, the market has advanced despite conditions that have historically been associated with significant market losses. Frankly, we're used to similar frustration during late-stage bull market advances – you'll see a similar creep upward in the red line approaching the 2000 and 2007 market peaks before severe market losses ensued. Still, the recent period has been particularly uncomfortable because of QE-driven speculation. You'll also notice a few similar upward segments in 1969, 1972, 1981 and 1987, indicating that a defensive stance would have resulted in some period of missed returns.

Notably, the recent situation could have been helped by overriding our approach with rules amounting to versions of "Don't fight the Fed", but those same rules applied to past cycles and long-term history would have failed dramatically. Remember that the 50% market plunges in 2000-2002 and 2007-2009 both unfolded despite aggressive and continuous monetary easing (see Following the Fed to 50% Flops).

We continue to align our investment outlook with the expected Sharpe ratio that is associated with prevailing conditions at each point in time (see Aligning Market Exposure with the Expected Return/Risk Profile). Strong opportunities to accept market risk have emerged over the course of ev! ery marke! t cycle in history (and no stress-testing concerns will interfere with those opportunities as they did in the recent, extraordinary cycle). In my view, the primary concern here is not the risk of missing long-term returns, but of losing intermediate-term discipline in conditions that have historically proved damaging. Even if the S&P 500 Index goes nowhere over the coming decade - as historically reliable measures of valuation suggest - it will probably go nowhere in an interesting and volatile way, providing better value and opportunities that are well-supported by historical evidence. The challenge will be to maintain discipline even when frustration begs investors to abandon it.

No doubt, one can dispense with my concerns about market risk here by observing that the market has advanced despite our increasingly negative return/risk estimates, allowing one to conclude that "this time is different," and will continue to be so indefinitely. In my view, the more likely possibility is that investor faith in unlimited quantitative easing has supported a severe compression in equity risk premiums; that this faith is based largely on collective belief bordering on superstition – rather than on any meaningful historical relationship between the monetary base and the level of equity valuations; and that the extent of market overvaluation is obscured by profit margins that have been elevated to unprecedented but temporary heights by equally unprecedented but temporary deficits in government and household savings. If that case is true – and I believe it is – then the appropriate conclusion is not that this time is different, but merely that an increasingly weighty anvil has not yet dropped.

As I observed last week:

"Despite individual features that convinced investors in each instance that 'this time is different,' my perspective is that the truly breathtaking market losses in history share a single origin: the willingness of investors to forgo the need for a risk premium on s! ecurities! that have always required one over time. Market crashes are largely synonymous with a spike in risk premiums from previously inadequate levels. Once the risk premium is beaten out of stocks, there is no way out, and nothing that can be done about it. Poor subsequent returns, market losses, and the associated destruction of financial security are already baked in the cake. This should have been the lesson gleaned from the period since 2000, but because it remains unlearned, I am convinced that it will also become the lesson of the coming decade."

Economic Notes

A few observations about economic activity here. One is that while the low level of initial claims for unemployment has been a bright spot, the simple fact is that initial claims are almost always depressed at major market peaks, which contributes to the optimism and euphoria at those highs. In the chart below, I've added arrows over the present instance not to imply that the market must be at a peak here, but simply to emphasize that the recent pattern of new claims for unemployment (red line, right scale, inverted) is not at all inconsistent with previous instances of maximum market risk.

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More broadly, the best way to characterize the incoming economic data is that we've observed some modest improvement in recent months, but still around levels that have historically marked the borderline between economic expansion and recession. Indeed, the composite message from numerous regional Fed and ISM (Institute for Supply Management) surveys is not much different than what we observed just before the last recession. Overall then, we've observed a modest bounce over the past few months, but weak and not particularly meaningful from a historical perspective.

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Meanwhile, the Federal Reser! ve's at! tempt to support employment growth through quantitative easing has been much like doing a frantic rain dance over thin ice, in hopes of attracting more fish. The first question that should be asked is whether there is any demonstrable mechanism (even one that can be illustrated with a basic scatter plot in historical data) that would link the efforts to the desired outcome; the answer being no. The second question that should be asked is whether the continued attempt creates the risk of unintended consequences; the answer being yes.

So while it's true that the 3-month average of monthly job creation has declined from 233,000 in February, to 172,000 in May, to 148,000 at present, this is more an indication of the ineffectiveness of quantitative easing than an argument for its continuation. We expect that the Fed will pursue a course of gradually fading out its efforts at quantitative easing, but in a way that aims to ease the potential disruption of the financial markets, where nearly all of the effect – primarily distortionary – has been centered. This really should not be a surprise, given that even the minutes from the January FOMC meeting indicated that "an ongoing evaluation of the efficacy, costs, and risks of asset purchases might well lead the Committee to taper or end its purchases before it judged that a substantial improvement in the outlook for the labor market had occurred." To quote Dallas Fed President Richard Fisher, commenting last week about the impact of QE on the real economy – "I don't believe it had any efficacy."

Sunday, September 8, 2013

Americans May Not Understand Their Credit Cards, but They Like Them

Less than half of Americans who use credit cards say they "completely understand" the terms of use for their cards. And just under 60% say they understand how to earn those rewards that the credit card companies promote endlessly. A full third have no idea of the benefits associated with their credit cards.

The data comes from the seventh U.S. credit card satisfaction survey by J.D. Power. While U.S. consumers may not know what they've got or what they're missing, satisfaction with their credit cards is up 14 points compared with last year's survey. On a 1,000 point-scale, the average satisfaction score is 767.

Top 10 Growth Stocks For 2014

The top-ranked card, as it has been in every year of the survey, is issued by American Express Inc. (NYSE: AXP), which gets a satisfaction score of 816. Close behind are cards issued by Discover Financial Services (NYSE: DFS) with a score of 812. Cards issued by J.P. Morgan Chase & Co. (NYSE: JPM) get a satisfaction score of 783 and rank third.

A J.D. Power executive notes:

The fact that the economy is improving and consumers generally feel better about their personal financial situations is certainly helping to improve satisfaction with credit card issuers, especially considering there was such instability in the industry just a few years ago.

Fewer card users have seen rate increases in 2013, just 5% compared with 6% a year ago. Credit card customers also think they are better off financially than they were a year ago, 27% this year to 23% in 2012. The percentage who believe they are worse off has fallen from 23% last year to 17% this year.

Based on the J.D. Power study, we should expect card-issuing companies to expend more effort on mobile technology. Less than one-quarter of customers now can use a mobile app view their card benefits, redeem rewards or get special promotional offers. Mobile apps are used by just 5% of credit card customers, compared with 19% who are retail banking customers. Better mobile offerings could become a significant differentiator among a group of products that are quite similar in most other respects.

Friday, September 6, 2013

5 Stocks Under $10 Set to Soar

DELAFIELD, Wis. (Stockpickr) -- There isn't a day that goes by on Wall Street when certain stocks trading for $10 a share or less don't experience massive spikes higher. Traders savvy enough to follow the low-priced names and trade them with discipline and sound risk management are banking ridiculous coin on a regular basis.

Just take a look at some of the hot movers in the under-$10 complex from Wednesday, including Astex Pharmaceuticals (ASTX), which skyrocketed higher by 23.7%; Hanwha Solarone (HSOL), which soared higher by 16.3%; JA Solar (JASO), which ripped higher by 15.9%; and Amtech Systems (ASYS), which trended up by 15.6%. You don't even have to catch the entire move in lower-priced stocks such as these to make outsized returns when trading.

One low-priced stock that recently spiked sharply higher was solar player ReneSola (SOL), which I highlighted in Aug. 22's "5 Stocks Under $10 Set to Soar" at around $4.30 per share. I mentioned in that piece that shares of SOL had been uptrending very strong for the last four months and change, soaring higher from its low of $1.25 to $4.85 a share. This stock had recently pulled back off that $4.85 high to $3.52 a share. Shares of SOL were just starting to bounce off that $3.52 low and were quickly moving within range of triggering a breakout trade above some near-term overhead resistance levels at $4.25 to $4.50 a share and then above its 52-week high at $4.85 a share.

Guess what happened? Shares of SOL stared to flirt with that breakout during the next few trading sessions after the stock hit $4.73 a share. Then on Aug. 30, shares of SOL cleared all of those key resistance levels with massive upside volume. As I write this, SOL has hit an intraday high of $5.90 a share, which represents a big gain of 35% since the stock was trading at $4.30 a share. That's a massive run in a very short timeframe for anyone who played this breakout setup. Shares of SOL could still easily hit $7 to $8 a share in the coming months, since the uptrend for the stock is still intact and volume flows remain bullish.

Low-priced stocks are something that I tweet about on a regular basis. I frequently flag high-probability setups, breakout candidates and low-priced stocks that are acting technically bullish. I like to hunt for low-priced stocks that are showing bullish price and volume trends, since that increases the probability of those stocks heading higher. These setups often produce monster moves higher in very short time frames.

I'm not as eager to recommend investing long-term in stocks that trade less than $10 a share because these names can be very speculative, and the odds for picking the long-term winners aren't great. But I definitely love to trade stocks that are priced below $10. I like to view them as a trading vehicle with lots of volatility and lots of upside when the trade is timed right.

When I trade under-$10 names, I do it almost entirely based off of the charts and technical analysis. I also like to find under-$10 names with a catalyst, but that's secondary to the chart and volume patterns.

With that in mind, here's a look at several under-$10 stocks that look poised to trade higher from current levels.

LDK Solar

One under-$10 name that's starting to move within range of triggering a near-term breakout trade is LDK Solar (LDK), a vertically integrated manufacturer of PV products for polysilicon, wafers, cells, modules, systems, power projects and solutions. This stock is off to a decent start in 2013, with shares up 13.1%.

If you take a look at the chart for LDK Solar, you'll notice that this stock has been trending range bound and consolidating for the last month and change, with shares moving between $1.42 on the downside and $2 a share on the upside. Shares of LDK have just started to trend back above its 50-day moving average at $1.55 a share with decent upside volume flows. That move is quickly pushing shares of LDK within range of triggering a near-term breakout trade above a key downtrend line that has acted as resistance for a few months.

Traders should now look for long-biased trades in LDK if it manages to break out above some near-term overhead resistance levels at $1.78 to $1.83 a share and then once it clears more resistance at $2 a share with high volume. Look for a sustained move or close above those levels with volume that hits near or above its three-month average action of 1.97 million shares. If that breakout triggers soon, then LDK will set up to re-test or possibly take out its next major overhead resistance levels at $2.17 to its 52-week high at $2.32 a share. Any high-volume move above $2.32 to $2.36 will then give LDK a chance to tag $3 to $3.50 a share.

Traders can look to buy LDK off any weakness to anticipate that breakout and simply use a stop that sits right below some key near-term support levels at its 200-day moving average of $1.46 or at $1.42 a share. One can also buy LDK off strength once it clears those breakout levels with volume and then simply use a stop that sits a comfortable percentage from your entry point.

Nordic American Tankers

Another shipping player that's starting to trend within range of triggering a near-term breakout trade is Nordic American Tankers (NAT), an international tanker company that owns approximately 20 modern double-hull Suezmax tankers, including four newbuilding vessels. This stock is off to a slow start in 2013, with shares off by 7.7%.

If you take a look at the chart for Nordic American Tankers, you'll notice that this stock has been downtrending badly for the last month and change, with shares dropping from its high of $10.31 to its recent low of $7.65 a share. During that downtrend, shares of NAT have been consistently making lower highs and lower lows, which is bearish technical price action. That said, shares of NAT have just started to bounce higher off that $7.65 low and it's quickly moving within range of triggering a near-term breakout trade. This bounce could be signaling that the downside volatility for NAT is over at least in the near-term.

Market players should now look for long-biased trades in NAT if it manages to break out above its 50-day moving average at $8.50 and then once it takes out its 200-day moving average at $8.63 a share with high volume. Look for a sustained move or close above those levels with volume that registers near or above its three-month average volume of 1.01 million shares. If that breakout triggers soon, then NAT will set up to re-test or possibly take out its next major overhead resistance levels at $9.89 to $10.31 a share.

Traders can look to buy NAT off any weakness to anticipate that breakout and simply use a stop that sits right below some key near-term support at $7.65 a share. One can also buy NAT off strength once it clears those breakout levels with volume and then simply use a stop that sits a comfortable percentage from your entry point.

Merrimack Pharmaceuticals

One under-$10 biopharmaceuticals player that's just starting to trigger a breakout trade is Merrimack Pharmaceuticals (MACK), which focuses on discovering, developing and preparing to commercialize medicines paired with companion diagnostics for the treatment of serious diseases, with an initial focus on cancer. This stock has been hit hard by the bears so far in 2013, with shares off by 38%.

If you take a look at the chart for Merrimack Pharmaceuticals, you'll notice that this stock has been downtrending badly for the last two months, with shares plunging from its high of 7.09 to its recent low of $3.26 a share. During that move, shares of MACK have been consistently making lower highs and lower lows, which is bearish technical price action. That said, shares of MACK have just formed a double bottom chart pattern at $3.26 to $3.32 a share and it's now starting to break out above some near-term overhead resistance at $3.64 a share. This move could be signaling a trend change for MACK as the stock starts to move higher off oversold conditions.

Traders should now look for long-biased trades in MACK if it manages to break out above some near-term overhead resistance at $3.64 a share with high volume. Look for a sustained move or close above that level with volume that hits near or above its three-month average action of 1.87 million shares. If that breakout triggers soon, then MACK will set up to re-test or possibly take out its next major overhead resistance level at its 50-day moving average of $4.75 a share. Any high-volume move above that level and above more resistance at $5.06 will then give MACK a chance to tag its 200-day moving average at $5.71 a share.

Traders can look to buy MACK off weakness to anticipate that breakout and simply use a stop that sits right below some key near-term support levels at $3.32 or at $3.26 a share. One can also buy MACK off strength once it clears $3.64 a share with volume and then simply use a stop that sits a comfortable percentage from your entry point.

Forest Oil

Another under-$10 name in the energy space that's starting to move within range of triggering a big breakout trade is Forest Oil (FST), which is engaged in the acquisition, exploration, development, and production of natural gas and liquids in North America. This stock has been under selling pressure so far in 2013, with shares off by 16%.

If you take a look at the chart for Forest Oil, you'll notice that this stock has been uptrending strong for the last two months, with shares moving higher from its low o $3.77 to its recent high of $5.73 a share. During that move, shares of FST have been consistently making higher lows and higher highs, which is bullish technical price action. This stock has now started to spike back above its 200-day moving average of $5.52 a share and it's quickly moving within range of triggering a big breakout trade.

Market players should now look for long-biased trades in FST if it manages to break out above some near-term overhead resistance at $5.73 a share with high volume. Look for a sustained move or close above that level with volume that hits near or above its three-month average action of 3.77 million shares. If that breakout triggers soon, then FST will set up to re-test or possibly take out its next major overhead resistance levels at $6.52 to $7.40 a share.

Traders can look to buy FST off weakness to anticipate that breakout and simply use a stop that sits right below some near-term support at $5.32 a share or below its 50-day at $5.01 a share. One can also buy FST off strength once it clears $5.73 a share with volume and then simply use a stop that sits a comfortable percentage from your entry point.

L&L Energy

One final under-$10 coal player that looks ready to trigger a major breakout trade is L&L Energy (LLEN), which, through its subsidiaries, engages in the production, processing and sale of coal in the People's Republic of China. This stock is off to a hot start so far in 2013, with shares up 34%.

If you take a look at the chart for the L&L Energy, you'll notice that this stock has been downtrending badly for the last four months, with shares falling from its high of $4.94 a share to its recent low of $2.13 a share. During that downtrend, shares of LLEN have been consistently making lower highs and lower lows, which is bearish technical price action. That said, shares of LLEN have now started to rebound off that $2.13 low and it's quickly moving within range of triggering a major breakout trade. If this rebound holds, then it could mean the downside volatility for LLEN is over in the short-term.

Traders should now look for long-biased trades in LLEN if it manages to break out above its 200-day moving average at $2.59 to its 50-day moving average at $3.02 a share and then once it takes out more resistance at $3.10 a share with high volume. Look for a sustained move or close above those levels with volume that hits near or above its three-month average action of 646,402 shares. If that breakout triggers soon, then LLEN will set up to re-test or possibly take out its next major overhead resistance levels at $3.83 to $4 a share. Any high-volume move above those levels will then put its next major overhead resistance levels at $4.40 to its 52-week high at $4.94 a share into range for shares of LLEN.

Traders can look to buy LLEN off weakness to anticipate that breakout and simply use a stop that sits right that recent low of $2.13 a share. One can also buy LLEN off strength once it clears those breakout levels with volume and then simply use a stop that sits a comfortable percentage from your entry point.

To see more hot under-$10 equities, check out the Stocks Under $10 Setting Up to Explode portfolio on Stockpickr.

-- Written by Roberto Pedone in Delafield, Wis.

Wednesday, September 4, 2013

5 Stocks Under $10 Making Big Moves

DELAFIELD, Wis. (Stockpickr) -- At Stockpickr, we track daily portfolios of stocks that are the biggest percentage gainers and the biggest percentage losers.

>>5 Stocks Insiders Love Right Now

Stocks that are making large moves like these are favorites among short-term traders because they can jump into these names and try to capture some of that massive volatility. Stocks that are making big-percentage moves either up or down are usually in play because their sector is becoming attractive or they have a major fundamental catalyst such as a recent earnings release. Sometimes stocks making big moves have been hit with an analyst upgrade or an analyst downgrade.

Regardless of the reason behind it, when a stock makes a large-percentage move, it is often just the start of a new major trend -- a trend that can lead to huge profits. If you time your trade correctly, combining technical indicators with fundamental trends, discipline and sound money management, you will be well on your way to investment success.

>>5 Big Trades for a Market Top

With that in mind, let's take a closer look at a several stocks under $10 that are making large moves to the upside.

National Bank of Greece

National Bank of Greece (NBG) is engaged in providing financial services including retail and commercial banking, global investment management, investment banking, insurance, investment activities and securities trading. This stock closed up 9.9% to $4.19 in Thursday's trading session.

Thursday's Range: $3.82-$4.28

52-Week Range: $2.85-$32.50

Thursday's Volume: 7.47 million

Three-Month Average Volume: 4.29 million

Shares of NBG ripped higher on Thursday after the company reported a net profit of 344 million euros ($458.91 million), which was above analyst estimates.

>>3 Huge Stocks to Trade (or Not)

From a technical perspective, NBG bounced sharply higher here right above its 50-day moving average of $3.69 with heavy upside volume. This move is quickly pushing shares of NBG within range of triggering a major breakout trade. That trade will hit if NBG manages to take out some key overhead resistance levels at $4.42 to $4.47 with high volume.

Traders should now look for long-biased trades in NBG as long as it's trending above its 50-day at $3.69 and then once it sustains a move or close above those breakout levels with volume that hits near or above 4.29 million shares. If that breakout hits soon, then NBG will set up to re-test or possibly take out its next major overhead resistance levels at $5 to $5.97.

Goldfield

Goldfield (GV) is a provider of electrical construction services in the southeastern U.S. and a developer of condominiums on the east coast of Florida. This stock closed up 11.6% to $1.82 a share in Thursday's trading session.

Thursday's Range: $1.61-$1.84

52-Week Range: $1.45-$5.67

Thursday's Volume: 363,000

Three-Month Average Volume: 235,174

>>5 Rocket Stocks to Buy This Week

From a technical perspective, GV skyrocketed higher here with heavy upside volume. This stock has been downtrending badly for the last five months, with shares falling from its high of $3.49 to its recent low of $1.45. During that move, shares of GV have been making mostly lower highs and lower lows, which is bearish technical price action. That said, the downside volatility for GV might be over since the stock has now started to rebound strong above that $1.45 low.

Traders should now look for long-biased trades in GV as long as it's trending above Thursday's low of $1.61 and then once it sustains a move or close above Thursday's high of $1.84 to its 50-day at $2.07 with volume that hits near or above 235,174 shares. If we get that move soon, then GV will set up to re-test or possibly take out its next major overhead resistance levels at $2.27 to $2.40. Any high-volume move above those levels will then put its 200-day at $2.64 to more resistance at $2.73 into range for share of GV.

Uranium Energy

Uranium Energy (UEC) is a natural resource exploration company engaged in the exploration of properties that may contain uranium minerals in the U.S. This stock closed up 3.4% to $2.39 in Thursday's trading session.

Thursday's Range: $2.30-$2.39

52-Week Range: $1.40-$3.02

Thursday's Volume: 304,000

Three-Month Average Volume: 664,231

>>5 Cash-Rich Stocks to Triple Your Gains

From a technical perspective, UEC bounced notably higher here right above its 50-day moving average of $2.23 with lighter-than-average volume. This stock has been trending sideways and consolidating for the last month and change, with shares moving between $2.13 on the downside and $2.65 on the upside. This bounce on Thursday is now starting to push shares of UEC within range of triggering a breakout trade above the upper-end of its sideways trading chart pattern. That trade will hit if UEC manages to take out some near-term overhead resistance levels at $2.47 to $2.55 and then once it clears more resistance at $2.65 with high volume.

Traders should now look for long-biased trades in UEC as long as it's trending above its 50-day at $2.23 or above its 200-day at $2.19, and then once it sustains a move or close above those breakout levels with volume that hits near or above 664,231 shares. If that breakout triggers soon, then UEC will set up to re-test or possibly take out its next major overhead resistance levels at $2.74 to $3.02 to $3.08. Any high-volume move above those levels will then put $3.50 to $4 into range for shares of UEC.

CYS Investments

CYS Investments (CYS) is a specialty finance company that invests on a leveraged basis in residential mortgage pass-through securities for achieving consistent risk-adjusted investment income. This stock closed up 1.1% to $7.86 in Thursday's trading session.

Thursday's Range: $7.67-$7.88

52-Week Range: $6.74-$15.03

Thursday's Volume: 1.42 million

Three-Month Average Volume: 3.61 million

>>4 Stocks in Breakout Territory on Big Volume

From a technical perspective, CYS trended modestly higher here with lighter-than-average volume. This stock has been downtrending badly for the last four months, with shares dropping sharply from its high of $12.50 to its recent low of $6.74. During that move, shares of CYS have been consistently making lower highs and lower lows, which is bearish technical price action. That said, shares of CYS have now started to rebound sharply off that $6.74 low and it's quickly moving within range of triggering a near-term breakout trade. That trade will hit if CYS manages to take out some near-term overhead resistance levels at $8.19 to its 50-day moving average of $8.30 with high volume.

Traders should now look for long-biased trades in CYS as long as it's trending above some key near-term support at $7.50 or above $7 and then once it sustains a move or close above those breakout levels with volume that hits near or above 3.61 million shares. If that breakout hits soon, then CYS will set up to re-test or possibly take out its next major overhead resistance levels at $8.99 to $9.33. Any high-volume move above those levels will then put $10 to $10.87 into range for shares of CYS.

Axcelis Technologies

Axcelis Technologies (ACLS) designs, manufactures and services ion implantation, dry strip and other processing equipment used in the fabrication of semiconductor chips in the U.S., Europe and Asia. This stock closed up 5.2% to $1.99 in Thursday's trading session.

Thursday's Range: $1.92-$2.00

52-Week Range: $0.82-$2.24

Thursday's Volume: 428,000

Three-Month Average Volume: 711,522

>>4 Big Tech Stocks on Traders' Radars

From a technical perspective, ACLS bounced sharply higher here right off its 50-day moving average of $1.93 with lighter-than-average volume. This stock has recently formed a triple bottom chart pattern at $1.81, $1.85 and $1.86. Following that bottom, shares of ACLS have now trended back above its 50-day and it's quickly moving within range of triggering a big breakout trade. That trade will hit if ACLS manages to take out some near-term overhead resistance levels at $2.02 to $2.09 and then once it clears its 50-day at $2.24 with high volume.

Traders should now look for long-biased trades in ACLS as long as it's trending above $1.86 or $1.81, and then once it sustains a move or close above those breakout levels with volume that hits near or above 711,522 shares. If that breakout hits soon, then ACLS will set up to enter new 52-week-high territory above $2.24, which is bullish technical price action. Some possible upside targets off that breakout are its next major overhead resistance levels at $2.70 to $3.

To see more stocks that are making notable moves higher today, check out the Stocks Under $10 Moving Higher portfolio on Stockpickr.

-- Written by Roberto Pedone in Delafield, Wis.


RELATED LINKS:

Top Penny Stocks To Buy For 2014



>>4 Stocks Rising on Unusual Volume



>>5 Hated Earnings Stocks You Should Love



>>5 Stocks Under $10 Set to Soar

Follow Stockpickr on Twitter and become a fan on Facebook.

At the time of publication, author had no positions in stocks mentioned.

Roberto Pedone, based out of Delafield, Wis., is an independent trader who focuses on technical analysis for small- and large-cap stocks, options, futures, commodities and currencies. Roberto studied international business at the Milwaukee School of Engineering, and he spent a year overseas studying business in Lubeck, Germany. His work has appeared on financial outlets including

CNBC.com and Forbes.com. You can follow Pedone on Twitter at www.twitter.com/zerosum24 or @zerosum24.


Tuesday, September 3, 2013

Top Dividend Stocks For 2014

It's not optional: Shareholders of record on May 31 will receive a quarterly dividend of $0.15 per share on June 21 from futures and options exchange operator�CBOE Holdings� (NASDAQ: CBOE  ) , the company announced this week.

CBOE has paid a quarterly dividend since 2010 and in December 2012 paid investors a special dividend of $0.75 per share. The exchange operator paid the dividend out of cash on hand, paying approximately $67 million.

CBOE, as the largest U.S. options exchange and creator of listed options,�is the holding company for�Chicago�Board Options Exchange, the CBOE Futures Exchange, and other subsidiaries.

The most recent dividend payment equates to a $0.60-per-share annual dividend yielding 1.6% based on the closing price of the stock on May 1.

Top Dividend Stocks For 2014: Terrain Minerals Ltd (TMX.AX)

Terrain Minerals Limited engages in the mining and exploration of mineral resources in Australia. It explores for gold and nickel in the Eastern Goldfields of Western Australia. The company holds 100% interest in the Aztec Dome project located in east Kambalda; 60% interest in the Black Cat project located north of Leonora; and interest in the Dodgers Well project located north of Leonora. Terrain Minerals Limited is based in Subiaco, Australia.

Top Dividend Stocks For 2014: Anaren Inc.(ANEN)

Anaren, Inc. engages in the design, development, and manufacture of components, assemblies, and subsystems primarily for the wireless communications, satellite communications, and space and defense electronics markets worldwide. The company?s products receive, process, and transmit microwave and radio frequency (RF) signals. It provides Xinger line of products that consist of off-the-shelf surface mount microwave components for use in equipment for cellular base stations, wireless local area network, Bluetooth, and satellite television; and resistive products, such as resistors, power terminations, and attenuators for use in high power wireless, industrial, and medical applications. The company also custom splitting and combining products comprising RF backplanes, ferrite based power combiners, low-power radio receive splitter assemblies, and custom ferrite components for distribution of signals in wireless base station applications. In addition, it designs and manufactur es microwave-based hardware consisting of radar countermeasure subsystems, beamformers, switch matrices, radar feed networks, analog hybrid modules, and mixed signal printed circuit boards for use in radar systems, jamming systems, smart munitions, electronic surveillance systems, and satellite and ground based communication systems. The company markets its products to original equipment manufacturers and other industry participants. Anaren, Inc. was founded in 1967 and is based in East Syracuse, New York

Top 10 Casino Companies For 2014: Sourcefire Inc.(FIRE)

Sourcefire, Inc. provides intelligent Cybersecurity technologies to commercial enterprises and government agencies worldwide. The company?s network security products include Sourcefire appliances for detecting, blocking, and analyzing network traffic; Sourcefire IPS to examine network packets for threats; Sourcefire NGIPS to discover the characteristics and vulnerabilities of computing devices communicating on a network; Sourcefire NGIPS with Application Control to provide granular control of applications; Sourcefire NGFW that includes application control and firewall capabilities; and Sourcefire SSL Appliance, which decrypts SSL traffic for inspection by network security appliances. It also offers FireAMP, a malware protection solution that uses data analytics to discover, understand, and block malware outbreaks; and Sourcefire Defense Center that provides application programming interfaces to interoperate third-party systems, such as firewalls, routers, log management, security information event management, trouble ticketing, patch management systems, and other technologies. In addition, the company provides Sourcefire Virtual Appliance, an application to inspect communications between different virtual machines; Sourcefire Virtual Defense Center, which provides central management, event analysis, and reporting services; Snort, a traffic inspection engine used in intrusion prevention system; ClamAV, an open source anti-malware product; and Razorback, an open-source project that addresses threat detection and protection. Further, it provides customer support, professional, and education and certification services. The company serves financial institutions, defense contractors, health care providers, IT companies, telecommunication companies, and retailers, as well as national, state, and local government agencies. Sourcefire, Inc. was founded in 2001 and is headquartered in Columbia, Maryland.

A Low-Risk, High-Reward Precious-Metals Trade

After months of watching prices fall, silver bulls at last have some good news... They finally have an "extreme" condition working in their favor.
 
Regular readers know we urge every trader to become a "connoisseur of extremes." This means monitoring the market for extreme situations where valuations, technical readings, and sentiment are badly out of whack. These extreme, "out of whack" situations often precede big price moves.
 
And right now, we have such an extreme in the silver market.
 
This extreme was created by a giant "blowout" in silver over the last 10 months. In September 2012, silver was trading over $34 an ounce. Earlier this summer, it dropped below $19. In other words, silver lost nearly 50% of its value. (Gold lost "only" 33%.)
 
That massive drop has put investor sentiment toward silver in extreme territory...
 
Speculative trading funds hold historically low net-long positions in the metal. (Producers and consumers, on the other hand, are massively long.) At market extremes, speculative funds often lean heavily toward one side of the market... and it's a good idea to bet against them.
 
In the 10-year chart below, you can see that speculative trading funds hold the lowest amount of bullish bets in 10 years.
 
 
Now take a look at the next chart. It shows the last 12 months of trading in silver. Since bottoming around $18.50 in June, silver has dug in a "toehold" in the $19-$20 range. It's strung together a short series of "higher lows" and "higher highs." It's likely the start of an uptrend.
 
 
If silver keeps moving higher, the speculative funds that are now massively short the metal will rush in to buy in order to cover their short positions. That will drive prices higher. A rally back to $28 per ounce isn't out of the question.
 
Since silver is just off its recent lows, there's a compelling risk/reward trade right here. Traders can consider buying silver or the silver fund (SLV) and setting a stop near the recent lows.
 
Silver has been through a "blowout" bear market. Sentiment toward the metal is terrible. The price is moving higher. This makes for a low-risk, high-reward trade.
 
– Amber Lee Mason and Brian Hunt