Wednesday, January 30, 2013

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Monday, January 28, 2013

Investing in Women's Fashion Growth



Zacks Investment Research reports there have been retail winners and losers emerging from the 2012 holiday season. One of the winners was Francesca's Holdings Corporation (FRAN) which recently raised its fourth quarter guidance based on a strong holiday performance. It's a Zacks Rank #1 (Strong Buy).

Francesca's operates 360 small stores in 44 states in strip malls, shopping malls and neighborhoods which sell a mix of apparel, jewelry, accessories and gifts in a homey setting. It targets female shoppers aged 18 to 35 and brings in new merchandise every week to keep offerings fresh.

The company also has a website, francescas.com, which accounts for only 1.5% of sales but more resources are expected to be put into online sales this year.

Raised Fourth Quarter Guidance

Santa was good to Francesca's this holiday season. On Jan 14, the company raised its sales and EPS guidance for the fourth quarter due to the solid holiday.

Sales are expected to be between $84.5 million to $85 million, that's up from its Dec 5 guidance of $82.5 million to $83.5 million. Sales were up 37% to 38% over the prior year. Same store sales jumped 7% to 8%. Earnings per share are expected to be 29 to 30 cents, up from prior guidance of 27 to 28 cents.

All About the Growth

The growth is there. Francesca's has a strategy to expand to 900 stores in the next 7 years. Earnings are expected to rise 85% in fiscal 2012 and another 24% in fiscal 2013.

The analysts got bullish after the company talked up the solid holiday season in mid-January. 7 out of 13 estimates moved higher in the last month for fiscal 2012, which isn't surprising given that the company just raised guidance. But 5 out of 13 estimates also were raised for next year which means the analysts are optimistic that this earnings and sales growth will continue this year.

Very Volatile Stock

Francesca's stock isn't for the feint of heart. Since it started trading in 2011, it has been on a roller coaster. In May 2012, the stock suffered when the CFO left after posting inappropriate tweets and investors got nervous again in September 2012 when the CEO and one of the co-founders announced he was retiring from the company.


This Is No Value Stock

Francesca's is no value play. It has a forward P/E of 28, which is well above its peers at 17.4. It has a price-to-book ratio which is sky high at 22.5. Its peers average 2.7.

But it has a return on equity (ROE) of 114%, which crushes its peers at 17%. And because of its huge EPS growth this year, its PEG ratio almost puts it in undervalue territory, at 1.03, as a PEG under 1.0 can indicate value. Remember, though, you're buying the future growth.

For those investors looking for a retailer with expected double digit earnings growth, Francesca's should be on the short list.

Click Here for a Free Trial of Zacks Investment Research

Friday, January 25, 2013

"Profit Rockets" Momentum Trading Stock Picks


Investing and Trading for Low-Risk High-Reward Profits

There's many ways to trade and invest in the stock market for low-risk high-reward returns. One such way is through Momentum Trading. Our "Profit Rockets" Stock Picks Service provide subscribers low-risk high-reward stock picks on SP500, NYSE, and Nasdaq stocks based on strong increasing or decreasing stock prices or what's called momentum trading.

We Identify and Plan the Trade - You Execute the Trade Plans

Our "Profit Rockets" Stock Picks provide buy entry, stop-loss, take profit area price targets with recommended trade management to keep losses small and let winners run. We email multiple stock picks to subscribers daily before the US market opening for your review and or execution. Click the link above to review more detailed information on the "Profit Rockets" service, review past trade performance, and avail of a free trial.

"Profit Rockets" Momentum Stock Pick for January 25. 2013

Below is one stock of a company that we have identified using our proprietary momentum trading system. Subscribers are provided with daily multiple stock picks sent to their email.

Buy United Parcel Service - Ticker UPS - Sector: Services

Buy Entry: 79.81 to 83.01

Stop-Loss: 77.96

Take Profit Areas: 87.37 to 88.18, 92.75 to 93.56

Recommended Trade Management: Use ATRStop as a trailing take profit stop in case of extended gains beyond our take profit price area targets. 2.8% annual dividend yield.


Momentum Investing and Trading Methodology by Zacks Investment Research

With current market conditions continuing to apply pressure to stocks across all sectors, a major emphasis has been placed on value investing, as bargain-hungry investors scour the financial landscape for stocks with historically low prices or valuations. This is unquestionably a great investing methodology.

But the most successful investors, consistently producing the best results, understand that market conditions can change in a flash, and that is why it is so important to have multiple trading strategies to leverage against different market conditions in order to maximize returns.

An essential component of any effective investment philosophy is Momentum investing, which has produced incredible returns for countless number of investors since the inception of open-market trading. So although Momentum may not be the flavor of the day, now is the perfect opportunity for any investor to develop a momentum trading strategy, or make further enhancements to an existing model. Because as noted by Sun-tzu in The Art of War, "Every battle is won long before it is ever fought."

What is Momentum Investing?

Momentum trading is an investment style that aligns investors with markets that have been aggressively trending, in an attempt to exploit any short-term or long-term opportunities to benefit from the prevailing sentiment. This momentum can be a product of either anticipated or actual earnings, but in either instance, the objective is to get on board with a stock that is accelerating and ride the wave of enthusiasm.

How is Momentum Established?

There are an infinite number of circumstances that can create momentum, and Zacks has plenty of excellent resources in order to identify these opportunities.

On a fundamental basis, one of the leading drivers of momentum is a healthy quarterly earnings report. When a company steps up and handily beats the street, this sends a very bullish message to the market, and investors are quick to respond, snapping up shares and sending prices higher. Zacks has an entire page exclusively dedicated to tracking and documenting companies historical quarterly performances, called Estimates. Zacks also provides a Price & Consensus Chart, which is a chart that documents the relationship between earnings estimates and share performance. Both of these tools are excellent resources for identifying an existing or developing trend, leading the well-prepared momentum investor to the doorstep of opportunity.

Momentum can be born out of technical formations as well. This frequently happens when a company's stock price crosses a particularly sensitive price point, a 52-week high for example. The market perceives this as an indicator that the company is progressing towards its goals and targets, and can hatch significant amounts of investor enthusiasm. Zacks has plenty of resources for identifying these types of situations as well, but one of the most powerful is the Zacks Custom Screener. This is an excellent tool for the previously mentioned criteria because it contains features that allow users to zero-in on stock prices in a relative or absolute capacity. For example, companies trading within 3% of their 52-week high, or stock prices between $95 and $100.

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Thursday, January 24, 2013

Freedom and Responsibility in Trading


Creating freedom for myself and others is part of my mission statement and for whatever reason (more awareness?), this concept has been showing up more frequently from a number of different directions. If the following various ideas aren’t too disparate, let’s see if they can prompt some thinking about freedom as it applies to traders.

Freedom and Freedoms

For the overall idea of this article, let’s describe freedom as the ability to choose. You will find that you seem to have more freedom—more choices— in some areas of your life where in others, you appear to have few or no choices. (I’ll leave it up to Van for now the discussion of how it’s all an illusion. He writes about that in his next book.)

Freedom is a naturally recurring topic in trading. Generally, the markets offer anyone with enough money to open an account, the voluntary and speculative participation in the capital process of modern economies. Trading offers the promise of prosperity to be as potentially close as a mere few trades away. As attractive as that sounds to some, the financial industry fails to mention the amount of proper preparation that market participants truly require so they don’t lose their shirts in the long run.

A number of people trade so they can choose to work at a job—or not—at some future point. The process of pursuing this goal can have an ironic effect. Several years back, Melita Hunt, former CEO of the Van Tharp Institute, challenged this newsletter’s readers to ask themselves if they had become a slave to monetary freedom. I wondered if I had become captive to this too but wondered more about a particular couple I recall form various Van Tharp workshops at that time. Both people worked demanding professional jobs but spent every spare moment working on their businesses. Their goal was to retire within ten years, but from my perspective, they seemed burned-out rather than free, especially in a psychological sense.

As it turns out, psychological freedom may be the most important form of freedom. In one of her lectures, Marianne Williamson discussed various forms of freedom—political, religious, financial, etc. She stated clearly, however, that psychological freedom is the most valuable form of freedom. With it, other forms of freedom are desirable but not required because psychological freedom provides one with many choices regardless of his or her external circumstances. Psychological freedom is the ability to frame a situation within context of what it offers in possibilities, from a deeper human or spiritual level. For an “unpleasant” situation, you could choose to mentally fight it, surrender to it, manage it constructively, or try to ignore it. All those are choices— choices for which you are responsible.

Flip Side of Freedom

Responsibility is one of two not-so-often-mentioned, fundamentally required components, of freedom. If Van teaches one core principle for trading, it is you are fully responsible for your results. You have the responsibility to choose to trade or not, to prepare yourself by understanding a myriad of topics or not, to understand yourself or not, etc. English vocabulary did not offer what he wanted people to understand so he developed a new term to help describe his concept. He uses the term respond-ability as a better way to describe how you posses the complete ability to respond to life’s circumstances with your choices, and how you even generate those circumstances.

The Other Work

There’s another kind of work required for freedom. Effort may be a better word here, as physically, you may not do anything more strenuous than perhaps turning off the TV or radio and becoming more quiet. Freedom’s other component is awareness. Awareness of what thoughts you are thinking and believing, of what you are creating, of your true Self, and of all the choices you genuinely have at your disposal.

Awareness can help traders in numerous ways small and large. Most basically, awareness of your current mental state can help you determine if you should even be trading today. Trading in an angry or depressed state can be as dangerous to your equity as trading in an ecstatic state. Do you evaluate your mental state prior to executing trades? That is one of Van’s daily steps in his Top Tasks of trading. On a whole other level of awareness, Van has one Super Trader graduate he calls his star graduate. She had little trading experience before the program but can now trade from a very aware state and make more than 100R a month trading just an hour or two a day. Clearly, she has developed her awareness to a very high level and applies it to the markets with breathtaking results.

At the other end of the spectrum, a low level or lack of awareness means a lack of choices. If that’s the case and it seems like there are no choices, how do you become more aware? That’s a challenge for anyone, though, there are numerous ways. It can be as simple as spending quiet time alone, or as simple as feeling your feelings or making an effort to be present in the moment.

Van developed one method with one of the Super Traders that takes a little discipline and technology to execute, which I use. I set up an automatic alert to pop up on my computer screen every twenty minutes during the day with a few simple questions like “What is my mental state? What thought am I thinking? What does thinking this thought get me into? What would be the opposite of this thought?” In an Access database, I recorded all my answers for conscientiousness in the moment and also for review later.

Although this exercise was based on awareness, it struck me that it actually helped me be more free. Every twenty minutes, I was asked to be aware of and accountable for my thoughts and actions. Many times, the questions “loosened up” reality a little by reminding me of possibilities for thinking other than the way I was, or to actually do something different. The simplified process might look something like this:

Awareness -> Responsibility -> Freedom

In full disclosure, sometimes these computer screen alerts felt like a disruptive pain in the butt. In looking over all my answers in the database, however, the process clearly generated alternatives to whatever single thought I had at the time (many times without a choice) and allowed me the ability to consciously choose to continue in one direction or make a change.

Are you up for an exercise like that? If you want more freedom, more choices, you might start with awareness and accountability. Here are some questions you might consider:

Do you have a sense of your personal level of awareness and accountability?

Where are you free in your life and where are you not?

Where do you think you have no or very few choices?

Why is that?

Awareness, responsibility, and freedom can all help your trading, sure. They can also help you live a better life. Eventually and ultimately, we each have the freedom offered by infinity and eternity. But what does that have to do with markets or trading?

Indeed.

Click Here to Review More About Dr. Van Tharp Trading Education Home Study Programs and Training Workshops

Wednesday, January 23, 2013

Apples Expected Earnings Surprise Prediction


Zacks Investment Research reports that Apple Inc. (AAPL) is expected to beat expectations when it reports first quarter results on Jan 23, 2013 after the closing bell.

Why a Likely Positive Surprise?

Our proven model shows that Apple is likely to beat earnings in the first quarter of 2013 because it has the appropriate combination of Zacks Earnings ESP and Zacks Rank.

Zacks ESP: Expected Surprise Prediction or ESP represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate. Currently, the Most Accurate Estimate and the Zacks Consensus Estimate for Apple stand at $13.92 and $13.47, respectively. This equates to a +3.34% ESP for Apple.

Zacks Rank #3 (Hold): Note that Zacks #1, #2 and #3 Ranked stocks have a significantly higher chance of beating earnings.

These two factors make us reasonably confident about a positive earnings beat on Jan 23.

What is Driving the Better than Expected Earnings?

We expect strong performance from iPhone 5 combined with the launch of the new iPad mini, iPad 4 and iMac product lines to drive earnings in the first quarter. Apple launched iPhone 5 in China, South Korea and 50 additional countries in the first quarter. Apple sold 2 million iPhones in China in the very first weekend. In the domestic market, carriers AT&T (T) and Verizon (VZ) also reported continued strong demand for iPhone 5.

Apple’s new iPad mini and iPad 4 received overwhelming response, as the company sold three million iPads in just three days of launch. Apple also launched the iTunes store in Russia, Turkey, India, South Africa and 52 additional countries in the first quarter.

Other Stocks to Consider

Apple is not the only firm looking up this earnings season. We also see likely earnings beats coming from these two industry peers:

Amazon.com Inc (AMZN), which has a Zacks Earnings ESP of +20.7% and Zacks Rank #3 (Hold).

Facebook (FB), which has a Zacks Earnings ESP of +9.1% and Zacks Rank #2 (Buy).

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Tuesday, January 22, 2013

Investing in Financial Asset Management


Zacks Investment Research reports BlackRock Inc. (BLK) announced impressive fourth-quarter results last week, including a hike in its quarterly cash dividend. This Zacks Rank #2 (Buy) asset management company hit a 52-week high on the day of the report. It currently pays a regular quarterly dividend that yields 2.6% annually.

With a solid dividend yield and an expected long-term earnings growth rate of 12.2%, BlackRock looks like a promising pick for investors seeking both growth and income.

Solid Q4 Results

On Jan 17, 2013, BlackRock announced fourth-quarter adjusted earnings of $3.96 per share, topping the Zacks Consensus Estimate by 5.9% and the year-ago earnings by 29.4%. The improvement was primarily attributable to an increased top line, partly offset by higher operating expenses.

BlackRock’s total revenue was $2.54 billion, up 14.0% from the prior-year quarter. Total revenue was also ahead of the Zacks Consensus Estimate of $2.48 billion. Total expenses increased 8.1% to $1.53 billion, mainly due to higher employee compensation and benefits, direct fund expenses, as well as general and administration expenses. AUM totaled $3.79 trillion as of Dec 31, 2012, rising 7.9% from the year-ago period. Moreover, total long-term inflows for the quarter climbed 3.1% to $3.48 trillion.

Earnings Estimates Advancing

The Zacks Consensus Estimate for 2013 is $15.26 per share, which is up 2% in 30 days and 1.2% in just the past 7 days. Meanwhile, the Zacks Consensus Estimate for 2014 is $17.06, up 2.6% in a month and 1.8% in the past week.

Dividend Payment

In January 2013, BlackRock announced a 12% hike in its quarterly cash dividend to $1.68 per share. The dividend will be paid on Mar 25, 2013 to shareholders at the close of business on Mar 7, 2013. This dividend rate affirms an annual yield of 2.6%.

Reasonable Valuation

Shares of BlackRock currently trade at 15.3x 12-month forward earnings, a 30.8% premium to the peer group average of 11.7x. Its price-to-book ratio of 1.6 is 45.5% above the industry median of 1.1. Given its strong fundamentals, the valuation looks reasonable.

The company has a trailing 12-month ROE of 9.7%, compared with the peer group average of 9.0%. This implies that the company reinvests its earnings more efficiently than its peers.

BlackRock has been continuously outperforming the S&P 500, as well as the 200 and 50 day moving averages over the last three months. The stock has returned 30.3% over the past year, compared with the S&P 500’s return of 13.0%.


Headquartered in New York, BlackRock Inc. is one of the world’s largest publicly-traded investment management firms. The company offers products that span the risk spectrum, including active, enhanced and index strategies. The company also provides risk management as well as advisory and enterprise investment system services. Founded in 1988, BlackRock has a market cap of nearly $39.7 billion. Lazard Ltd. (LAZ) and Affiliated Managers Group Inc. (AMG) are the other Zacks Rank #2 (Buy) stocks in the industry.

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Monday, January 21, 2013

Preparing Profitable Trade Plans


The Proper Order for Trading Preparation . . . Among Other Things

Q: I am a subscriber to your weekly newsletter. I have also read and re-read each of the following books a number of times;

Trade Your Way;

Safe Strategies;

Super Trader; and

The Definitive Guide to Position Sizing

I recently downloaded and completed all 10 levels of the Position Sizing Game (albeit on the ‘easy’ mode). I did not go bankrupt once, and whilst I did not progress through each level on the first attempt my account was always profitable at the end of 100 trades, and on level 3 I progressed with a 500% gain. My account total at the end of level 10 was $38 Million. I was able to cascade through these levels reasonably quickly by applying the principals outlined within the Definitive Guide to Position Sizing as follows:

1. Using the SQN score for each level to establish the Maximum Portfolio Heat, as well as to limit the downside potential on my original capital (for each level), by using a small bet size.

2. When in a profitable position I used the portfolio heat to establish a maximum bet size on my winnings (i.e. markets money technique), and I combined this with my original capital small be size.

I have a history of failure in the real markets. I have tried stock and options trading in the past, however I realize that I never had a system and approached it with a gambling mentality. Through the Van Tharp products I have developed an understanding of the importance of issues surrounding exits, position sizing, R-Multiple distributions, starting capital, SQN scores for system evaluation, setting objectives, and my next goal is to be able to design and trade some of my own systems. I have read in some of your publications that it is fairly easy to design quality systems for each of the market types, however I still do not know how or where to start in this process of system design. This obviously means that I have more work to do, and I guess I am seeking some guidance from the Van Tharp Institute on what the next stage of my development in this area could/should encompass so that I can work towards achieving my next goal.

On a separate matter I read with interest Model 15: Scaling in Techniques (in Definitive Guide to Position Sizing). The reason this interested me is because it seems that if you have a few winning trades happening and you apply a form of scaling in at different levels, then this has the potential to substantially increase the expectancy and SQN of a system, without having to look elsewhere for great trading opportunities. i.e. you can create multiple great trading opportunities from just one initial trade, because your winnings will not just be based on your initial position, they will multiply. So for example on one trading stock instead of having a 4R gain (if you did not scale in), you may end up with a 10R gain (if you did scale in). Am I on the right track with my thinking on this?

I look forward to hearing from you in due course. Many thanks! — Kimai B., Australia

A: Thank you very much for your business and for your question. Can I answer for Van? This week, he has a publishing deadline for “Trading Beyond The Matrix”, his latest book.

Congratulations on your success in the position sizing game. You might consider playing many more times and altering your objectives for the game to learn how to effectively craft position sizing strategies for each—shoot for the moon, go very conservative, etc.

As for developing trading systems, you have a lot of good information already in the Trade Your Way book. Before you get to that step, however, there are a lot of considerations. Van stresses putting 50% of your time and effort of planning for a trading business into your objectives. What are you trying to accomplish? With great clarity and understanding, can you define it? Why do you want that goal? Are you worthy of it?

Then you have to consider other items as well—What kind of resources and knowledge do you have already? What are your strengths? Weaknesses? How much time do you have? How will you manage the gambler part of you? Besides the effects that the gambler part of you has on your trading, what other parts or biases do you have? How will you deal with those?

Just to give you a sense of what Van has the Super Traders do so you might see what he believes is the proper order for trading preparation:

1. Complete the Peak Performance Home Study Course,

2. Write a lengthy (>100 pages) business plan

3. Develop three non-correlated trading systems

4. Trade those three systems at a 95%+ efficiency level for >100 trades

Van believes unless a trader understands his psychology at a deep level, then trading may turn out to be an experience of self-sabotage and frustration. Van actually has most of the Super Trader candidates stop trading for the first three stages of the program so they can focus on their personal and business development. That’s quite a commitment but this group is very serious about trading well.

No one has to go through the ST program to trade well—but following through on the major steps of the program probably makes great sense given Van’s extensive research and experience helping traders. You can take all of the steps basically on your own at home. But we do have a few workshops (the two workshops in February for example) that would help as well.

As for your thinking on scaling in, you are on a correct track. Trend followers who catch a good move and scale in effectively can make great gains with one good trend. That also implies being patient and living with (the possible frustration of) long periods of time with many small losses and good drawdowns. Your psychology matters—some people can do this, many cannot.

Click here to review Van Tharp Trading Education Home Study Programs and Training Workshops

Friday, January 18, 2013

World Currency War


While the talk about the global currency wars is nothing new, recent statements from the central bankers/policymakers in some of the major countries indicate that 2013 may be the year of a major war.

The term was coined by the Brazilian finance minister who said that the loose monetary polices in the U.S. and the Europe were hurting the emerging economies as the investors poured money into higher yielding assets and currencies of the emerging countries.

Brazil's government has been very active in its efforts to stem the Real's appreciation, though capital controls and interventions.

Russia’s central bank deputy chief said yesterday “we are on the verge of very serious and confrontational actions in the sphere…called currency wars”.

EuroGroup chief Juncker recently said that “Europe is no longer willing to be the last economic player holding the toxic parcel of an over-valued exchange rate”. Bank of England Governor Mervyn Kingsaid in December “concern is that in 2013 we'll see the growth of actively managed exchange rates as an alternative to the use of domestic monetary policy”.

Japan’s new prime minster Shinzo Abe has called for “unlimited easing” by the BOJ. Bank of Korea Governor stated a couple days back that the nation will take an “active” response on the Won if needed.

Swiss central bank has expanded its portfolio of foreign assets four times in the last three years in its efforts to keep the lid on Swiss Franc appreciation. China has always been suspected of manipulating its currency, but the country actually allowed its currency to appreciate against the dollar last year. However the new regime in China may not be supportive of Yuan appreciation.

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Wednesday, January 16, 2013

Protecting Yourself from Apples Stock Price Slide



Zacks Investment Research reports the technology sector started 2012 on a strong note outperforming the S&P 500 index. But as the year progressed the sector went through major swings and somewhat lost its way. So much so that investors shifted their focus from technology to other, better performing sectors. Below are three great tech ETFs that avoid Apple.

Many technology-focused ETFs are fighting to hold on to its gains because of a big drop in Apple’s share price. These ETFs have a heavy exposure to the industry giant thus affecting their performance. In fact, their returns are arguably directly linked to the rise and fall of Apple.

The path of the stock, which dominates the holding of most of the tech ETFs, has been quite difficult since September, the time when it last touched the $700 mark. In fact Apple’s share price tumbled more than 28% from its all-time high and has definitely entered into a bear market phase.

Attributable to the recent downtrend in Apple’s share price, many tech focused ETFs have had a tough time, or at least have an uncertain outlook. The two ETFs which rely heavily on Apple are PowerShares (QQQ) and Technology Select Sector SPDR (XLK). QQQ has invested more than 16% in the company while the company makes up nearly 17% in Technology Select Sector SPDR Fund (XLK).

In this scenario, investors who want to stay invested in the tech space but stay away from Apple will have to look beyond the giants of QQQ and XLK for other opportunities. For these investors, we have highlighted three great tech ETFs below that shun AAPL and could potentially be better picks if weakness in the firm persists:

iShares S&P North American Technology-Software Index Fund (IGV)

This ETF provides exposure to companies specializing in software and thus avoids the hardware-focused Apple. The fund manages an asset base of $652.6 million.

With a total of 55 stocks, the fund has its top three holdings in Oracle, Salesforce.com and Microsoft with a total share of 25.68%. The fund has a concentrated play in the top ten with total investment of more than 55%.

Large caps dominate the holding pattern with more than 50% of asset invested while a very small proportion of the asset base go towards mid caps and small caps. The fund charges a fee of 48 basis points annually. The fund delivered a return of 17% over a period of one year.

PowerShares S&P SmallCap Information Technology Portfolio (PSCT)

For those looking to cash in on a technology ETF providing exposure to small cap companies, PSCT can be a solid option. The fund offers up no exposure to the giant Apple, and instead zeroes in on pint sized securities.

The fund manages an asset base of $83.2 million which is invested in a basket of 126 small cap securities. The fund is not biased towards the top ten holdings with just 22% invested in these 10. Commvault System, Cymer Inc and 3D System take the top three positions in the fund.

The fund charges an expense ratio of 29 basis points annually and delivered a return of 9% over a period of one year.

iShares MSCI ACWI ex-US Information Technology Sector Index Fund (AXIT)

Investors seeking to invest in the technology space without any exposure to the Cupertino-based company can also look to invest beyond the U.S. AXIT is one of the ETFs which provides exposure to non-U.S. technology companies.

This ETF is home to 80 non-U.S. technology companies with its main focus on Japan, Taiwan and South Korean companies. The fund has in total 63.02% of the asset base invested in these three regions. Germany, China, Sweden, India, the Netherlands, U.K. and France are the other countries in which the fund allocates its asset base.

Among individual holdings, Samsung dominates the holding pattern with a 15.8% share in the asset base. Other than this, no other company gets a double-digit allocation in the top ten holdings. Despite international exposure, the fund does not appear to be expensive thereby charging a fee of 48 basis points annually.

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Tuesday, January 15, 2013

The Art and Science of Profitable Trading


Whether traders really think much about it or not they must overcome the question, “Is trading an art or a science?” Different traders will give you different answers with technical traders likely stating that it is a science and fundamental traders likely stating that it is more of an art. I believe that if you do not look at trading as an art and a science at some point in your trading career you may hit a roadblock and you may even end up losing on some trades when you really should win.

I believe that traders that strictly view trading in one way may hurt themselves in the long run because not only is trading about how indicators line up and what the price action is doing relative to them it is also in part based on the experience and feel that the trader has for trading. Trading is just like anything else; with experience you will know when it is likely that something will work out even though it may not look good on paper. You will also know based on past experience which situations have worked for you and which have not regardless of what anyone or anything may say should or should not work. The more you look at charts the more you will see because you will begin to recognize recurring situations.

Generally speaking trading is recognizing a move that is taking place in the market as early in its development as possible. It may sound a little painful but studying charts will help you to recognize moves that are likely to take place so you can take advantage of them. You will get a feel for the ebb and flow of the market or the specific issue that you are watching.

I have always noticed that traders in general are habit forming in the respect that they seem to go back to the same issues that they have traded in the past looking to trade them again. It seems as though once they have traded a security and have succeeded with it they get the feel for how it moves, they get to understand a little about the range it trades in and its tendencies and it seems as though it is a little easier to pull the trigger to trade an issue that they have traded in the past. It seems as though traders almost believe that they have created a relationship with specific stocks or whatever security it is that they are trading. This is definitely not a bad thing because if you believe that you are in tune with a security you may well be.

One my first lessons in trading stocks happened when I was in my late teens, I had a friend that was dating an older woman that was an experienced stockbroker so I mentioned to her a specific stock that I was interested in buying. When she asked me why I wanted to buy it I couldn’t give her any other reason than because the way the price movement looked to me I believed that it looked like it would go up. She told me that if you have a gut feeling about buying a stock that is strong enough for you to actually buy it more times than not you will probably be right; fortunately we were both right in that situation and the trade worked out well. The point is that including your intuition into your trading can be just as important as any indicator or any trading tool that you will ever use. I know there have been plenty of times when I have not traded a given issue because it didn’t feel right to me regardless of what the technical’s have told me to do and there have also been times when I jumped into the market when the technical’s were not very strong. I’m not saying to constantly break your own trading rules but I am saying to pay attention to your gut and to the little voice in your head when it speaks to you.

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Sunday, January 13, 2013

Investing in Banking Mortgages Investment and Trust Services



This week our free weekly stock pick comes from our "Profit Rockets" Stock Picks Service. The financial services sector is performing well, and we expect it to continue making Union First Market Bank an excellent low-risk high-reward buy long stock pick this week. UBSH currently has a 12.8 PE ratio and a 2.90% dividend yield.

Buy Long Union First Market Bank - UBSH

Buy Entry: 15.63 to 16.67

Stop-Loss: 15.21

Take Profit Areas: 17.61 to 17.62, 18.34 to 18.44

Trade Management: Use ATRStop as a trailing take profit stop in case of extended gains and or hold long-term with its 2.90% annual dividend yield.

On January 8, Zacks Investment Research upgraded Union First Market Bankshares Corporation (UBSH) to a Zacks Rank #1 (Strong Buy).

Union First has been witnessing rising earnings estimates on the back of strong third-quarter 2012 results. Moreover, this well-known provider of banking and related financial services to retail and commercial customers delivered positive earnings surprises in 9 of the last 10 quarters. The long-term expected earnings growth rate for this stock is 12.0%.

Union First reported third-quarter results on October 22. Earnings per share came in at 37 cents, surpassing the Zacks Consensus Estimate and year-ago earnings of 33 cents by 12.1%. Results benefited from an improved fee income, partly offset by higher expenses and a decline in net interest income.

The company's net interest income fell 1.7% year over year to $38.8 million. However, non-interest income totaled $15.6 million, jumping 36.3%, driven by higher other service charges, commissions and fees along with gains on sale of loans. Non-interest expenses soared 11.1% to $38.3 million, mainly due to higher salary and compensation costs.

Credit quality continued to improve at Union First. Provision for loan losses plummeted 33.3% from the prior-year quarter to $2.4 million. Similarly, as of September 30, 2012, nonperforming assets were 2.29% of total loans, down 79 basis points from the prior-year quarter.

Following strong third-quarter results, Union First also increased its quarterly dividend to 12 cents per share. This reflects a 20% increase over the prior-quarter and a 71% jump over the prior-year quarter.

The Zacks Consensus Estimate for 2012 increased 7.9% to $1.36 per share over the last 90 days. For 2013, the Zacks Consensus Estimate jumped 9.9% to $1.33 per share over the same time frame.

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Thursday, January 10, 2013

Skill and Luck in Investing and Trading


My high school basketball team was a “middle of the district” team—out of eight schools in our league, we were clearly better than three, clearly worse than three and about even with one of the other schools.

Late in my senior year, we played a Christiansburg High team whom we should have beaten, but it was on their court and we didn’t play our best. With seconds to go, it was a tie game. Christiansburg’s best player took a shot that bounced off the rim and traveled fairly far from the basket, out to where the guards (smaller players like me) are usually positioned. I jumped, grabbed the rebound and was slammed by a Christiansburg player who was going after the rebound as well. The ref called the foul and I would shoot a “one and one”, meaning that if I made the first throw, I would get a chance to sink the second.

As I stepped to the line, I still remember an unusual clarity about what was going on around me—an added acuteness of the senses, if you will. Like every basketball player on the planet, I had life-long dreams of one day stepping to the free throw line to take the game winning shot. I had physically practiced this very scenario thousands of times and played it out in my head since I was a little boy tens of thousands of times more.

I went through my normal pre-shot routine and released the ball. As the ball went through the hoop hitting nothing but net, it made the familiar “swish” which was followed by a roar from the fans. With the game won and the pressure off now, the second shot was another swish though to be honest, I remember it less well.

So I had lived out my “little boy” dream of hitting the game winning shot! I believe that a game winning shot and a well-played trade in the markets hold some interesting similarities but some notable differences between the roles of luck and skill.

Luck vs. Skill

An interesting book published in the last few months has gotten some press lately for a couple of reasons. Number one, it is well written and gives some great insights into the nature of success. But more importantly, viewers saw the book in a Warren Buffet office tour he recently granted to CNNMoney. To watch the brief clip, you can watch it here: http://money.cnn.com/video/news/2012/12/26/n-warren-buffett-office-tour.cnnmoney/ (Actually, no one mentions the book in the interview but you can barely glimpse the cover under a remote control as the camera pans across Buffett’s desk. Such is the cache of Warren Buffet…!)

The name of the book? The Success Equation: Untangling Skill and Luck in Business, Sports, and Investing by Michael J. Mauboussin. In it, the author writes about the fascinating roles of luck and skill in various activities. I was particularly intrigued by the distinctions that Mauboussin makes about the mix of those two factors in different fields of endeavor.

In certain areas, luck plays a small role while in others, it plays a large role. Where luck has a minor role (like in shooting free throws), cause and effect are closely related. Conversely, there is a looser causal relationship in areas where luck has a bigger part to play (weather forecasting, and yes, trading). In these latter areas (more affected by luck or outside chance occurrences), you can only distinguish skill over time or with a sufficiently large sample size.

Mauboussin also identifies a third category of activity: endeavors that are purely luck. This group would include activities like roulette or the lottery. He describes an easy test to distinguish this last group – skill is required if you can lose on purpose. I can clearly miss a free throw on purpose by shooting the ball 10 feet too short or aiming 90 degrees away from the bucket. But I can’t lose a coin flip on purpose not matter how hard I try (I’ll lose 50% of the time with a fair coin, just like everyone else).

For today, the main point that we can take away is that Van’s decades-long insistence on the importance of psychology in trading is clearly evident in Mauboussin’s work. Why? A horseshoe tossing champ doesn’t have to deal with many forms of uncertainty – his activity is very cause and effect oriented. But because traders and investors deal with uncertainty in every trade, our decision-making biases and processes can either make us or break us as traders! From a trading and investing perspective, I find some of Mauboussin’s insights invaluable. We’ll dig in more next week and I look forward to sharing more of Mauboussin’s work with you in future articles.

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Wednesday, January 09, 2013

Long-Term Forex Forecast Outlook



EURUSD




In the above chart of the EURUSD you can see that the overall movement has been to the upside while currently we are sitting near the area of support. This situation is ideal for taking a long trade as the trend is helping the price move up and the buying pressure at support is favorable for the price moving higher. In the next few weeks consider this as a bullish alignment for trading.

GBPUSD




The GBPUSD has a very similar pattern to the EURUSD but just a little bit wider. This will show as a bit more volatility so make sure you use appropriate stops and target to take these wider movements into consideration. This is also in a bullish alignment so look for opportunities to go long on a bounce up off of support. I’ll have more long term trades for you soon, so stay tuned.

AUDUSD




The AUDUSD is a bit more in consolidation and where we might look for some shorter term trades as the price moves between support and resistance. This is also where we will be looking for a break out either above the resistance or below the support area. On a break out we will look to trade in that direction as the new momentum is likely to continue moving the price for some time.

USDCAD




The USDCAD is really looking like it wants to break out as the converging of the support and resistance lines are becoming tighter and tighter. On a break out of these two area look for a nice continuation move either higher or lower. This type of pattern is nice to trade because it is simple to know when to look for entering into a position.

USDJPY




The USDJPY is a difficult one to trade right now as the momentum has been so strong to the upside. After a big move like we have seen it is usual to see some type of pull back into the trend. This will be one that we should look for a trade after the pair moves back down. This may be several days or weeks before this happens so keep an eye out for this move. Also, you may consider going to a shorter time frame in order to take advantage of this strong bullish momentum.

USDCHF




This pair is also forming a bit of a long term wedge as the support and resistance lines are converging on each other. This tightening pattern is where we can also look for a breakout but is also good to look for a bounce down off of the resistance area where it is currently hitting. Look to short this as it begins to move down from this point. Should a break out occur, look to trade in the direction of the move.

In the end we want to be able to see the trends and support/resistance areas on the longer term charts in order to determine how and when we should be trading. Take some time to do the same analysis on the weekly charts to see how they confirm the daily charts. The goal is to find good places to enter the trade by using trends and support and resistance in our evaluation of the charts.

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Tuesday, January 08, 2013

Earnings Season Starts This Week


With nothing much on the economic calendar this week, the market’s attention will likely shift to the fourth quarter earnings season which gets under way with Alcoa’s (AA) report after the close on Tuesday. The reporting season gets into high gear next week as the big banks report results, but a number of major companies, including Wells Fargo (WFC) and Monsanto (MON), will come out with fourth quarter results this week.

All indicators are pointing towards another underwhelming earnings season, not much different from what we saw in the third-quarter reporting cycle. But while expectations for fourth quarter earnings have been steadily coming down in recent weeks, investors appear unwilling to bring down estimates for 2013 as they hold on to hopes of a ramp in corporate profitability in the coming quarters. Guidance from management teams on earnings calls is always very important, but it is particularly important this reporting season given the lofty-looking earnings expectations for 2013.

Total earnings in the fourth quarter are expected to be up +0.4% from the same period last year. This is a sharp drop from the +7% earnings growth rate that consensus expected just three months ago.

Overall, ten of the 16 Zacks sectors will have negative earnings growth, with even the Tech sector experiencing earnings decline of -3.5% (Tech sector earnings were barely in the positive column in the preceding quarter). The Construction sector has the best earnings growth profile off all sectors, a function of the positive momentum in the housing sector. Total earnings in the Construction sector are expected to up +33.3% in the fourth quarter. The only other sector with double-digit earnings growth this quarter is Business Services.

The key question at this stage is whether the stock market momentum can be sustained in the face of negative momentum on the estimate revisions front. The bulls point towards the attractiveness of equities relative to other asset classes and pin their hopes on an expanding market multiple and declining risk premiums. Maybe the bulls have a point, but it will still pay to stay focused on the evolving earnings picture in the coming days.

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Sunday, January 06, 2013

Investing in Banking Credit Cards and Loans


01/07/13 - Buy Capital One Financial - COF

Buy Entry: 61.25 to 62.37

Stop-Loss: 58.21

Take Profit Areas: 65.48 to 65.94, 70.10 to 70.56

Recommended Trade Management: Use ATRStop as a trailing take profit stop in case of extended gains and or hold long-term your choice.


Jim Cramers the The Street reports that Capital One Financial (COF) was winner among the largest U.S. banks on Wednesday, with shares rising 6% to close at $61.23.

The Dow Jones Industrial Average was up over 2%, while the S&P 500 (SPX.X_) rose 2.5% and the NASDAQ Composite rose over 3%, following the passing by the House of Representatives late on Tuesday of a spending bill that was earlier passed by the Senate, resulting from a compromise worked out by Vice President Joe Biden and Senate Minority Leader Mitch McConnell (R., Ken.). The budget compromise limited income tax rate increases to couples with combined annual incomes of more than $450,000, while also raising capital gains and dividend income tax rates for the same group of people to 20% from 15%, and raising estate taxes to 40% from 35%.

Most working taxpayers will still see a tax increase in 2013, as the temporary 2% cut in the combined payroll tax for Social Security and Medicare was allowed to expire.

The next last-minute drama in Washington that can be expected to cause a market see-saw as members of Congress play another game of brinksmanship is the federal debt ceiling, which will likely be reached in February. KBW analyst Brian Gardner on Wednesday wrote that "most of that drama will likely wait until after President Obama's second inauguration on January 20 (public celebration on the 21st)."

The strength of bank stocks continued to build as the day went on. The KBW Bank Index KBW Bank Index (I:BKX_) was up over 3% to close at 52.93, with the 24 index components all showing gains of more than 2%. Bank of New York Mellon (BK_) was up 5% to close at $26.88. Index components showing 4% gains included Bank of America (BAC_), which closed at $12.03; Citigroup (C_), which closed at $41.25; Fifth Third Bancorp (FITB_), at $15.77; KeyCorp (KEY_), at $8.78; and Commerce Bancshares (CBSH_), closing at $36.34.

Looking to the Next Clean Quarter

On Monday, at the last minute, as investors grew more confident that the ridiculous Fiscal Cliff negotiations would end in a deal that would at least kick the federal spending can down the road, Capital One's shares recovered sufficiently to come out on top of a 2012 stock-picking contest.

Capital One ranked fifth among the 24 components of the KBW Bank Index, with shares returning 37.5% in 2012 through Monday's close at $57.93, following a flat return in 2011.

The shares now trade for 1.6 times tangible book value, according to Thomson Reuters Bank Insight, and for and for 8.7 times the consensus 2013 EPS estimate of $7.01. The consensus 2014 EPS estimate is $7.38.

2012 was a year of major transitions for Capital One, which in February acquired ING Direct (USA), followed by a $1.25 billion common equity raise in March, and the purchase of HSBC's (HBC_) U.S. credit card portfolio in May, for a premium of $2.5 billion. The ING deal included roughly $80 billion in deposits gathered over the Internet, along with $41 billion in loans, providing plenty of liquidity for the $28.2 billion in credit card loans acquired from HSBC.

The third quarter was the company's first "clean" quarter in 2012, with a return on average tangible common equity of 21.48%. FBR analyst Paul Miller on Dec. 19 included Capital One among his list of "stocks to own for 2013," with a price target of $72, saying the company is "one of our favorite names due to its compelling valuation ($72 target = 10x our FY13 EPS estimate and 1.1x book value), expected resumption of the dividend, and increased earnings power."

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Friday, January 04, 2013

Semiconductor Stocks Forecast Outlook


The Semiconductor Industry serves as a driver, enabler and indicator of technological progress. Developments in the industry determine the way we work, transport ourselves, communicate, entertain ourselves and respond to our environment. The PCs we work on, the cars we drive, the phones we communicate with, the electronic gadgets on which we watch movies, listen to music and play games on, and the planes and weapons used to transport or protect us use semiconductor devices.

As environmental issues have become more of a concern today, semiconductor devices are being made to reduce power consumption, reduce heat dissipation, capture solar energy, create more efficient lighting solutions and so forth.

The past decade has seen big changes in the industry, with most players streamlining operations and transferring more routine production to low-cost locations. This led to the development of the Asian market, where most memory production and backend operations have shifted.

However, since innovation remains largely within the country, the sector is one of the biggest employers of labor, with a corresponding significant impact on the overall economy.

End Market Drivers

The computing and consumer end markets together consume around 60% of total semiconductors sold. Therefore, they have a significant influence on total sector performance.

A number of factors, in combination, are bringing about a complete turnaround in the computing market. The near-term outlook is bleak for semiconductor manufacturers, with IHS iSuppli expecting sales to decline 1.9% this year. The negatives (tablet cannibalization, weaker-than-expected spending by both consumers and enterprises) are outweighing the positives (cloud computing, Windows 8) for now but things are expected to get better next year.

Emerging Markets, such as China, India, Brazil and Russia remain a positive for sector growth. However, this growth is coming at the cost of profits because of poorer purchasing power in these regions. Additionally, the macro weakness in developed regions is also impacting certain emerging markets.

With ultra-portable computing devices gaining popularity, the distinction between consumer and computing markets is blurring in some cases. Of course, the consumer electronics market also includes other gadgets such as LCD TVs, Blu-ray players and smartphones.

The Consumer Electronics Association (“CEA”) expects global consumer electronics sales to be up 5.9% this year, driven by growth in tablets (up 83% from 2011), smartphones (up 24%), networked-enabled TVs (20%) and 3D-enabled displays (75%). A growing number of consumer electronic devices are now being sold into /factory-installed on automobiles.

IHS iSuppli is very positive about semiconductor sales into the communications market and expects both the wireless and wireline segments to make a positive contribution. Wireless is expected to be the stronger of the two, increasing 10.4%, with wireline relatively flat at 0.7%. Increasing data volumes across the world and infrastructure build-outs in emerging regions are positive drivers.

Industrial consumption of semiconductors is expected to be one of the strongest this year, driven by the need for production efficiencies, which in turn is increasing demand for power management semiconductor solutions. IHS iSuppli expects semiconductors for industrial applications to be up 7.7% this year, just slightly short of the 9.3% growth in 2011. Medical Devices (normally included in this segment) is an emerging area where semiconductor usage continues to increase.

The automotive end market is an emerging area for semiconductors. The growing electronic content within this market is a secular trend, as demand for safety, infotainment, navigation and fuel efficiency continue to increase. As a result, semiconductors serving this market should grow stronger than the industry over the next few years, although, we may see some changes in days to come, since nearly a fifth of vehicle production has moved to China and we may expect more to follow.

While 2012 started off well, conditions deteriorated for suppliers somewhat because of the protracted weakness in Europe and sluggish recovery in the U.S. Therefore, IHS iSuppli expects the market to grow just 2.7% for the full year, down from the 10.0% growth recorded in 2011.

The aerospace and defense markets are considerably dependent on government spending and policy making. The commercial aerospace market (which lags an economic downturn or recovery) has started looking up. Production increases should be slightly positive for the semiconductor industry this year.

The outlook for defense spending on the other hand is not encouraging, with focus remaining on intelligence systems and basic weaponry. Electronic weaponry remains a bright spot. So semiconductor manufacturers serving these markets continue to see mixed results, depending on the customers served.

Forecast for the Full Year

Semiconductor sales in the first half of 2012 remained below the level generated in the first half of 2011.

Overall, Semiconductor Industry Association (SIA) projections (based on WSTS data) places worldwide semiconductor sales growth at 0.4% in 2012 and 7.2% in 2013. The Americas region is expected to be up 3.2% in 2012, Japan 1.7%, Asia/Pacific 0.1% and Europe down 3.5%.

IHS iSuppi is even more negative about growth this year, expecting the PC market slowdown to result in a 0.1% decline in global sales.

Major Players

The major players in the industry may be categorized into chipmakers (OEMs-whether fabless or otherwise), equipment and material suppliers and foundries.

Chip-makers

According to estimates from IHS iSuppli, Intel and Samsung remained the top two semiconductor suppliers in 2011, while Texas Instruments overtook Toshiba Corp. to attain the number three position (helped by the National Semiconductor acquisition).

Renesas remained at number 5, followed by Qualcomm, which moved up from the ninth position in 2010. STMicroelectronics remained at number 7, with Hynix, Micron Technologies and Broadcom in the eighth, ninth and tenth positions, respectively. Applied Micro Devices crept up from number 12 to number 11.

Equipment Makers

Gartner estimates that spending on semiconductor capital equipment increased 13.7% in 2011, on top of the 118.4% increase in 2010. The increase was almost totally driven by wafer fab equipment (“WFE”), with other segments declining mid-single-digits.

However, the research firm expects the equipment market to decline 19.5% to around $52 billion in 2012, growing 19.2% the following year. The decline is expected to be across all segments, with WFE declining 22.9%, automated test equipment (“ATE”) declining 16.5% and packaging assembly equipment (“PAE”) declining 13.5%.

SEMI estimates are slightly different. The research firm expects semiconductor equipment sales to decline 10.8% this year, following a 4.7% increase in 2011. The research firm expects all geographies except South Korea to decline in 2012 and rebound thereafter in 2013.

The increased spending on technology upgrades during 2011 resulted in sufficient capacity for 2012 and 2013. However, the growing demand for semiconductors is likely to encourage the next wave of spending some time in 2013. At that time, we are likely to see some new fabs, spending on which was averted to an extent in the current cycle through the use of superior technology.

Latest research from VLSI shows that ASML Holdings surpassed Applied Materials to attain the number one spot in 2011. This was possible because of increased spending on lithography tools during the year. Therefore, while the top 15 equipment suppliers grew just 13%, ASML and Nikkon (another supplier of lithography tools) together grew 27%. Tokyo Electron, KLA-Tencor and Lam Research occupied the next three positions, respectively.

However, the story could change again in 2012, because of consolidation in the market. This year, Applied will include Varian (number 13 from 10 months as an independent company in 2011), Lam will include Novellus (number 10 in 2011) and Advantest (number 8) will include a full year of Verigy.

Foundries

The pureplay Foundry segment has undergone significant changes over the past few years although the top five positions have not changed much, according to research from Gartner. Taiwan Semiconductor Manufacturing Company remains the leader by far, followed by Taiwan-based United Microelectronics Corp. Global Foundries remains at number three, with Chinese foundry Semiconductor Manufacturing International Corp at number four. The only change was with respect to specialty foundry TowerJazz, which displaced Dongbu Hi-Tech to jump to the fifth position.

A few clear leaders are emerging in the foundry segment – Taiwan Semiconductor at the trailing edge, Global Foundries at the leading edge and Tower Semiconductor in the specialty category (analog). Additionally, Intel and Texas Instruments’ foundries make them two strong contenders with leading edge capabilities.

Opportunities

One of the primary beneficiaries of the growth in mobile phones, tablets and the like is ARM Holdings, with its power-efficient, low-performance chip architecture. With new versions of ARM chips coming to market, it is likely that the chips will gradually spread to the server segment as well (not a 2012 phenomenon). Others would be Qualcomm, Samsung and Texas Instruments, all of which are big semiconductor manufacturers that use ARM architecture.

Although we remain cautious about Intel’s growth initiatives in mobile and believe that the macro situation remains a deterrent to Ultrabook sales, the company’s market position, cash balance, technology lead, and management strategy and execution are positives.

Analog companies with a focus on the communications, mobile and networking technologies such as Broadcom Corp and TriQuint Semiconductor may be expected to hold up better than others in the next few months.

The largest foundry, Taiwan Semiconductor is also likely to do well and valuation is attractive. Additionally, the patent war between Apple and Samsung may have Apple moving production to another foundry and Taiwan Semiconductor could be the beneficiary.

Weaknesses

We believe that inventory rebalancing and adjustment continue to date. Given the uncertainties in demand, we think that semiconductor manufacturers will curtail investment in capacity although technology purchases could continue. In this environment, we would avoid investment in equipment companies, such as Applied Materials, KLA-Tencor, Lam Research, etc.

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Thursday, January 03, 2013

Start 2013 Right with a Portfolio of ETF Securities


As the New Year is upon us, often we look for thing we can improve or change, I live by the age old adage; if it isn’t broken, don’t fix it. However, if you have a portfolio that is underperforming or just sitting in mutual funds not doing very well it may well be a time to make a change. Taking more control of your portfolio by investing in ETF securities may be a great place to start.

While Exchange Traded Funds are not new (they have actually been around for about 20 years,) they’re certainly getting a lot of attention lately. This is due to the ability for an individual investor to easily combine index investing with the convenience of the individual stock ownership, is a formula hard to resist. ETF’s are a collection of shares that follow a particular index, industry, or commodity, like a traditional mutual fund does, however, that is where the similarity ends.

There are several advantages ETF’s have over Mutual Funds for stock investors, because of the fundamental difference that ETF’s trade like individual exchange traded stocks.

The Differences vs. Mutual Funds:

When a new investor buys shares in a mutual fund, he or she pays the end of day NAV (net asset value). Since ETF’s are traded on the exchange, they act just like any individual stock issue, and can be purchased any time at the current price during the market hours.

When an investor purchases shares in ETS’s, unlike mutual funds, they may use pending limit orders, stop loss orders, and take profit limit orders just like stock trading. Also with ETF’s, you may go long or short, just like stocks.

With exchange traded funds an investor can also buy or sell any and number of shares that, she would like, even down to one share, if desired. This is a real advantage for the investor with a small portfolio, as many mutual fund, have much higher minimum requirements.

For investors with experience trading options, you can trade puts and calls on many ETF’s just like any other optionable stock.

The management fees are generally smaller in the ETF world, as they just need to pick the basket of shares that follow their sector or specialty, and are much less likely to have highly paid fund managers (expensive stock picking gurus.)

These are the major differences between the two kinds of funds in a nutshell. So, with ETF investing you can take more control of you investing decisions, take advantage of more active trading methods and stop paying the mutual fund managers to lose your money for you.

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Wednesday, January 02, 2013

Investing in New Cars Trucks SUVs Hybrids & Crossovers



"Profit Rockets" Stock Pick Service Selects Ford Motors for First Stock Pick of 2013!

The beginning of 2013 we have a buy on an American automobile icon . . . Ford Motor Company which comes from our "Profit Rockets" Service. The trade plan below is a short-term momentum trade as Ford's stock price is very strong right now. Longer term we would look for a very possible 15% annual share price gains from Ford. You may either trade it with the trade plan below with the current risk-on risk-off market conditions or buy and hold this great American company.

01/02/13 - Buy Ford Motors - (F)

Buy Entry: 12.31 to 13.37

Stop-Loss: 11.89

Take Profit Areas: 13.87 to 14.02, 14.95 to 15.10

Zacks Investment Research reports that Ford Motor Co. (F) anticipates nearly a 7% rise in its main brand sales to 2.20 million units this year from 2.06 million units in 2011. The company expects to achieve the sales growth with the help of its popular Ford Focus compact car sales.

Till September this year, the automaker sold 737,856 Ford Focus cars. Meanwhile, its other popular models, Ford Fiesta sedan and hatchback and F-series trucks, had sales of 560,061 units and 576,339 units, respectively, during the same period.

Last month, Ford’s sales grew 6.5% to 177,673 vehicles, driven by impressive sales growth of Ford Focus (56%) and pickup truck F-Series (18%). Most notably, the company’s small car sales shot up 76% from November last year. Due to the encouraging sales reports during the year, the company is looking forward to boost its production in 2013.

During the month, industry sales grew 15% to 1.14 million vehicles or 15.5 million on a seasonally adjusted annual rate (:SAAR) basis in the month, driven by pent-up demand generated from Hurricane Sandy as well as from the aging vehicles, and improving macroeconomic conditions. It was the five-year high sales recorded by the industry since 2007.

Despite posting a meager 3% growth in sales to 186,505 vehicles, Ford’s cross town rival General Motors Company (GM) saw its best November since 2007. Thanks to the double-digit growth in sales for its Buick and Cadillac brands.

Ford, a Zacks #2 Rank (Buy) stock, posted a 17.6% rise in earnings per share to 40 cents in the third quarter of the year from 34 cents a year ago, driven by impressive results in its North American operation and, to some extent, its Asian operation. With this, the company has also beaten the Zacks Consensus Estimate by 10 cents per share. Total profit rose 15.6% to $1.6 billion from $1.4 billion a year ago.

However, total revenue in the quarter slid 3.0% to $32.1 billion due to lower revenues in South America, Europe and Financial Services operations that offset the marginal improvement in revenues in North America and Asia. However, revenues were higher than the Zacks Consensus Estimate of $31.0 billion for the quarter.

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