Three Top-Notch Choices for Yield-Starved Investors

By Keith Fitz-Gerald, Chief Investment Strategist

My dad held up his hands and shrugged his shoulders. “But what can I do in a yield-starved environment?” he asked.

“Plenty, actually,” I told him.

In fact, there are a wide-range of choices available for income-hungry investors who are struggling to overcome the Fed’s disastrous zero-interest rate policies.

Obviously, though, the suitability varies widely depending on individual liquidity, credit and yield requirements.

Here are some of the more interesting options I’ve been exploring lately:

Near-Term Tax Free Fund (NEARX): From U.S. Global Investors, this fund is billed as an alternative for investors who want safety but are willing to take on a bit more risk.

I like the fact that the fund is a very consistent performer with more than 10 years of positive numbers in the record books. I also appreciate that the fund has been around since December 1990, particularly since I view it as a possible substitute for traditional money market funds or even CDs.

Morningstar gives NEARX 4-Star ratings overall in the 3-, 5-, and 10-year categories, while Lipper bestows 5 stars for preservation, expense and tax efficiency.

The fund’s goal is pretty straightforward. It invests in municipal bonds with short-term maturities issued by state and local governments nationwide.

Examples include holdings from the City of Chicago, the Commonwealth of Puerto Rico, and the City of San Antonio Texas Water System Revenue.

The strategy is pretty simple. With at least 80% of its net assets invested in investment-grade munis, it’s exempt from federal income tax — including my personal “favorite” middle-class eviscerator, the alternative minimum tax.

Maturities are kept to five years or less to avoid the volatility associated with longer-dated issues and the threat of rising interest rates. The average maturity is 3.40 years, while the average duration is slightly lower at 3.06.

30-Day SEC Yield: 1.03%

Expense Ratio: .45%

Note: Don’t be unnecessarily put off by the 1.03% yield. Remember this is a tax-exempt fund.

On a tax equivalent basis, the yield jumps to 1.77% for an individual in the 35% tax bracket. That’s actually higher than the yield on 10-year Treasuries as of press time.

iShares Morningstar Multi-Asset Income Index Fund (IYLD): From iShares, this fund is a more aggressive choice for income-hungry investors. It tracks the underlying Morningstar Multi-asset High Income Index, which is itself comprised of equity, fixed income and alternative income exchange-traded funds (ETFs).

The fund’s goal is yield and stability with capital appreciation potential.

While the fund is the newest of the three I’m highlighting today, I am intrigued by the concept of tracking the multi-asset index because it allows managers to move assets between income sources as market conditions change.

The fund’s inception date was in April of this year, so performance data is difficult to come by using a longer-term yardstick. That said, according to Yahoo Finance, the fund has chalked up a 6.28% gain versus the Standard & Poor’s 500’s 2.04% since it started trading on April 9.

And while it’s usually the bonds that hold this type of fund back as markets appreciate, this time around stocks appear to be the culprit, given the underlying index is split with 60% invested in bonds, 20% in equities and 20% in alternatives like REITs (Real Estate Investment Trusts) and preferred stocks.

Examples of the fund’s holdings include various funds from the iShares family such as the iShares iBoxx High Yield Corporate Bond (HYG), iShares JPMorgan Emerging Market Bond Fund (EMB), iShares S&P Preferred Stock Index Fund (PFF), and the iShares FTSE NAREIT Mortgage Fund (REM).

It’s worth noting that IYLD may be much more volatile in the future when interest rates ultimately begin to rise because of its overemphasis on bonds.

30 Day SEC Yield: 1.51%

Expense Ratio: 0.60%

Note: Bloomberg data showing the 30-day SEC yield tracks 12-month trailing distributions; the fund has had only two distributions to date. CNBC.com reflects a yield of 3.67%.

Clearbridge Energy MLP Fund, Inc. (CEM): From ClearBridge Advisors (A Legg Mason Company), this fund is pretty straightforward. It invests primarily in energy-related master limited partnerships.

Obviously what constitutes the “energy” sector is up for debate these days with all the merger and acquisition activity going on.

The fund determines its investment suitability using a 50% revenue threshold rule which requires any investment to derive at least that from exploration, development, production, gathering, transportation, storage, refining, distribution, mining and marketing of oil, natural gas liquids, and refined petroleum products and coal. (Whew…what a list!)

The goal is to invest in and produce sustainable cash flow that’s generated by long-term assets in the energy sector.

Not surprisingly, the fund’s managers pursue choices based on geographic distribution, asset composition and balance sheet strength.

I find it interesting the fund specifically targets companies believed to have the ability to make accretive acquisitions. This means they are looking for companies with the strength to buy growth as well as generate it organically.

Examples of present holdings include Enterprise Products Partners LP (EPD), Linn Energy LLC (LINE), Magellan Midstream Partners LP (MMP) and Williams Partners LP (WPZ).

Like IYLD, this fund is a relatively new arrival. Its inception date was little more than two years ago in June 2010, so there isn’t a lot to go on when it comes to measuring its long-term historical performance.

But the yield is a healthy 6.19% against its market price, according to company documents as of Wednesday.

Ordinarily, master limited partnerships come with their own set of tax and reporting headaches but CEM keeps that to a minimum. Investors actually receive a 1099 rather than a K-1 at tax time.

30 Day SEC Yield: 6.20%

Expense Ratio: 1.71%

At the end of the day there are obviously tradeoffs, so don’t think for a minute that income will be the smooth proposition it once was.

And remember what I told my dad: “Investors who persevere are typically rewarded for doing so.”

Best Regards,

Keith Fitz-Gerald, Chief Investment Strategist

Money Map Press

ADVFN – Report dei mercati

MERCATO USA
Borsa Usa: indici in rosso in vista del discorso del presidente della Fed a Jackson Hole

A New York i principali indici statunitensi archiviano le negoziazioni in territorio negativo in attesa che, dal meeting di Jackson Hole, Bernanke pronunci parole a sostegno della ripresa. Il Dow Jones registra un calo dello 0,81%, l’Sp500 dello 0,78% mentre il Nasdaq Composite cede l’1,05%.

Diversi i dati macroeconomici pubblicati in giornata. Le nuove richieste di sussidi di disoccupazione nella settimana terminata il 25 agosto sono salite a 374 mila, al di sopra delle attese pari a 370 mila. Inoltre e’ stato rivisto al rialzo il dato della settimana precedente (374 mila, rivisto da 372 mila). Il Deflatore dei consumi personali USA (Personal Consumption Expenditure Index) e’ rimasto invariato nel mese di luglio deludendo le attese degli analisti che avevano stimato un incremento dello 0,1% su base mensile ed in peggioramento rispetto alla rilevazione precedente (+0,2%). Su base annuale l’indice si e’ attestato a +1,6% (consensus +1,7%).

La spesa per consumi personali e’ risultata pari a +0,4% nel mese di luglio, registrando la prima crescita negli ultimi tre mesi e dopo una lettura invariata nel mese di giugno. Il dato e’ comunque risultato in linea con le stime degli addetti ai lavori. A luglio i redditi personali sono saliti dello 0,3% rispetto al mese precedente, in linea con quanto atteso dagli economisti. E’ stato tuttavia rivisto al ribasso il dato precedente da +0,5% a +0,3%.
Aste Usa

Il Dipartimento del Tesoro statunitense ha annunciato di aver collocato 29 miliardi dollari in titoli a sette anni. Il rendimento del TNote si e’ attestato al 1,081%, in crescita rispetto al rendimento registrato nell’asta di luglio pari a 0,954%. Le richieste hanno superato il quantitativo offerto di 2,80 volte, vicino alla media di 2,79 volte delle ultime sei aste. Sul fronte societario lettera su United Tech (-1,38%), Caterpillar (-1,88%) e Dell (-1,84%). Credit Suisse ha declassato Humana (-2,53%) da Outperform a Neutral, indicando il target price a 74,00 dollari. Attualmente il titolo quota 69 dollari. L’asset manager globale Carlyle (+0,35%) ha raggiunto un accordo per l’acquisizione per 4,9 miliardi di dollari in contanti della DuPont Performance Coatings (DPC). La transazione dovrebbe chiudersi entro il primo trimestre del 2013. DPC è un fornitore globale di sistemi di rivestimento per veicoli e industriali. Nel 2012 DPC dovrebbe superare i 4 miliardi di dollari di fatturato e gli 11 mila dipendenti. La Du Pont fa registrare una perdita dello 0,72%.

Il big della distribuzione Usa, Costco (+1,52%), ha chiuso il mese di agosto con vendite nette da 7,4 miliardi di dollari in crescita dell’8% sull’agosto del 2011. La società ha anche annunciato che questa settimana aprirà dei nuovi centri a Taiwan e in Corea. Ciena Corp. perde 19,50 punti percentuali nonostante la riduzione delle perdite nel terzo trimestre fiscale. Tale risultato e’ stato raggiunto grazie ad un buon incremento dei ricavi nel segmento dei pacchetti ottici. La società leader nel trasporto e nella commutazione ottica ha registrato una perdita di 29,8 milioni di dollari, inferiore ai 31,5 milioni di dollari di un anno fa. La perdita per azione si è attestata a 0,30 dollari, inferiore alla perdita di 0,33 dollari registrata nell’esercizio precedente. Escludendo elementi quali costi di acquisizione e di integrazione, la società ha registrato una perdita di 0,04 dollari per azione rispetto all’utile di 0,08 dollari di un anno fa. Gli analisti interpellati da Thomson Reuters avevano stimato una perdita 0,02 dollari per azione. Il margine lordo è ridotto al 38,2% dal 42,5%, tuttavia la società prevede per il trimestre in corso un fatturato tra 455 e 480 milioni di dollari.

In rosso la maggior parte dei titoli del settore tecnologico, tranne Pandora Media, la web radio quotata a New York, che sale del 14,29%. Ieri il titolo ha archiviato le negoziazioni a -0,98% dopo che la società ha comunicato di aver raggiunto il punto di pareggio nel secondo trimestre escluse le voci straordinarie. Gli analisti interpellati da FactSet avevano previsto una perdita di 4 centesimi per azione. I ricavi sono saliti a 89,4 milioni dollari dai 58,3 milioni di dollari dell’anno precedente. Il provider di servizi internet ha inoltre pubblicato una previsione di fatturato migliore del previsto per il terzo trimestre del 2012. La società di recensioni on-line Angie’s List perde il 5,48% dopo essere stata declassata a ‘hold’ da Canaccord Genuity. Tagliato anche il target price dai precedenti 20 dollari agli attuali 12,50 dollari.

Sears Holdings lascia sul campo il 7,92% dopo l’annuncio che la società verrà esclusa dall’indice SP500 e che al suo posto sarà invece inserita LyondellBasell Industries (+3,80%). Il gruppo biotech StemCells mette a segno un progresso del 21,74% dopo l’annuncio che il 3 settembre saranno presentati i dati di uno studio di Fase I/II relativi alla sperimentazione clinica di cellule staminali nel trattamento di lesioni al midollo spinale.

MERCATI ASIATICI

I dati macro penalizzano la borsa giapponese. Nikkei -1,6%

Borsa giapponese in deciso calo nell’ultima seduta settimanale. Il Nikkei ha ceduto 1,6 punti percentuali attestandosi a quota 8839,91 ed anche il Topix ha lasciato sul terreno l’1,6% circa portandosi a 731,64 punti. A preoccupare gli addetti ai lavori sono stati i dati macro rilasciati questa mattina ed in particolare quello relativo alla produzione industriale.

Il Ministero dell’Economia, del Commercio e dell’Industria giapponese ha reso noto che tale rilevazione a luglio si e’ attestata al -1,2% rispetto al mese precedente, in forte calo rispetto all’incremento dello 0,4% di giugno. Le attese degli analisti erano per un incremento di +1,7% m/m. Su base annuale il dato ha fatto segnare una contrazione del 1,0% a fronte di un valore iniziale di -1,5% (consensus +1,8%).

L’Indice PMI manifatturiero Nomura/JMMA si e’ attestato in agosto a quota 47,7, in netto calo rispetto alla precedente rilevazione pari a 47,9 punti. Il Tasso di Disoccupazione e’ invece risultato a luglio pari a +4,3% in linea con il dato rilevato nel mese precedente e con le stime degli analisti che avevano previsto un tasso fermo al +4,3%.
I consumi hanno evidenziato, nel mese di luglio, un rialzo del 1,7% su base annuale, in crescita rispetto alla rilevazione precedente (+1,6%). Le aspettative degli economisti erano fissate su un incremento dell’ 1,2% a/a. Stabile il dato sull’inflazione “core”, ovvero al netto dei cibi freschi. Nel mese di luglio tale rilevazione ha fatto segnare un calo dello 0,3% su base annuale (consensus -0,3%). Il dato totale sull’inflazione nazionale e’ stato pari a -0,5% indicando una minore contrazione rispetto alle attese (-0,6%).

I Nuovi Cantieri edili residenziali, infine, sono precipitati a luglio al -9,6% su base annuale, risultando comunque di poco migliore alle attese degli analisti che avevano stimato una contrazione del 9,9%.
Leggero calo sulle altre principali piazze azionarie asiatiche con Hong Kong che cede lo 0,3%, Shanghai lo 0,2% e Seul che ha chiuso praticamente invariata rispetto al giorno precedente.

MERCATI EUROPEI
Mercati europei sopra la parità in avvio

Avvio sopra la parità per i maggiori listini azionari europei. Il Dax 30 segna un rialzo dello 0,24% e il Cac 40 guadagna lo 0,31% a quota 3.389. In denaro anche l’Ibex 35 di Madrid (+0,57%) mentre si mantiene il Ftse 100 di Londra guadagna lo 0,13 per cento. Bene Milano con il Ftse Mib che guadagna lo 0,1 per cento. A Francoforte cede lo 0,74% il titolo Metro: secondo indiscrezioni di stampa, sarebbero in stato avanzato le trattative del colosso tedesco della distribuzione per la cessione degli asset non tedeschi della controllata Real.

In rialzo a Parigi il big del cemento Lafarge (+1,05%) che recupera terreno.  La pubblicazione a inizio settimana dei risultati semestrali era stata seguita dalla decisione di Jefferies di tagliare il prezzo obiettivo sul titolo da 46 a 45 euro, pur mantenendo il rating buy. A partire dalla seduta di ieri il titolo ha però avviato un recupero. A Madrid sono infine da segnalare i ripiegamenti in contro tendenza del titolo Acs (-1,02%).

MERCATO ITALIANO

Piazza Affari in netto progresso

Il Ftse Mib segna +0,9%, il Ftse Italia All-Share +0,8%, il Ftse Italia Mid Cap +0,6%, il Ftse Italia Star +0,1%. Borse europee in verde. Ieri sera l’S&P 500 ha chiuso a -0,78%, il Nasdaq a -1,05%. Al momento i future sui principali indici USA sono in rialzo dello 0,2% circa. A Tokyo l’indice Nikkei 225 ha terminato a -1,60%, mentre a Hong Kong l’Hang Seng è a -0,4%. Banca MPS (+4,2%) in forte rialzo dopo le dichiarazioni dell’a.d. Fabrizio Viola sui piani di riorganizzazione interna finalizzati alla riduzione dei costi.

Bene Saipem (+1,8%) grazie a Credit Suisse che ha migliorato la raccomandazione sul titolo da “neutral” a “outperform“. Lettera su Fiat (-1,1%). Secondo il Wall Street Journal il lancio della Dodge Dart (Chrysler) starebbe registrando vendite deludenti. Il nuovo modello, la prima compatta lanciata da Chrysler in sette anni, è determinante nel piano di rilancio elaborato da Sergio Marchionne. In rosso Buzzi Unicem (-1,4%) penalizzata dai downgrade di Exane e Morgan Stanley.
Debole Terna (-0,9%): UBS ha peggiorato la raccomandazione sul titolo da “buy” a “neutral”.

DATI MACRO

Venerdì 31 agosto
01:15 GIA Indice PMI manifatturiero ago;
01:30 GIA Consumi lug;
01:30 GIA Inflazione lug;
01:30 GIA Tasso disoccupazione lug;
01:50 GIA Produzione industriale lug;
08:00 GER Vendite al dettaglio lug;
10:00 ITA Tasso disoccupazione lug;
11:00 EUR Inflazione ago;
11:00 EUR Tasso disoccupazione lug;
11:00 ITA Inflazione ago;
12:00 ITA Indice prezzi alla produzione lug;
15:45 USA Indice PMI Chicago ago;
15:55 USA Indice fiducia consumatori (Univ. Michigan) finale ago;
16:00 USA Intervento Bernanke (Fed);
16:00 USA Ordini industriali lug.

TITOLI DEL GIORNO
Dopo aver testato un nuovo record storico a 29,58, Luxottica si sta ora muovendo per vie laterali nel tentativo di raccogliere energie fresche in grado di rilanciare l’uptrend in direzione degli obiettivi a quota 30, a 32 euro, sul lato superiore del canale che contiene l’andamento dei prezzi dallo scorso ottobre, ed eventualmente a 32,90 euro. La permanenza al di sopra dei top dello scorso maggio a 28,50 euro ed una decisa rottura di 29 euro confermerebbero questo scenario. Sotto 28,50 aumenterebbe invece il rischio di rivedere i prezzi sul supporto a 27,10 circa, 50% del rialzo partito a giugno e punto di passaggio della base del canale sopra citato.
Per chi volesse acquistare il titolo: intervenire oltre 29 euro con stop sotto 28,50 euro per i target a 30 e 32 euro.
Per chi detiene attualmente il titolo: ridurre le posizioni sotto 28,50 ed uscire alla violazione di 27,10. Incrementare oltre 29,58 per gli obiettivi a 32 e 32,90 euro.

Mediolanum ha chiuso la seduta di ieri con una leggera variazione (negativa) rispetto al giorno precedente, recuperando comunque terreno in termini di forza relativa nei confronti dell’indice. Il titolo e’ reduce da un perentorio rialzo che lo ha visto risalire dai minimi di luglio a 2,18 euro fin sopra quota 3,00. Fisiologica dunque la recente pausa di consolidamento che dovrebbe permettere ai corsi di accumulare energie fresche in attesa di un nuovo allungo. Discese fino a quota 2,85 resteranno compatibili con lo scenario rialzista, i cui obiettivi al di sopra di area 3,25 sono ipotizzabili a 3,50 e piu’ in alto a 3,76 euro, massimi annuali toccati a marzo. Sotto 2,85 invece la correzione assumerebbe dimensioni piu’ ampie prospettando il test dei sostegni successivi a 2,70 e 2,60 euro circa.
Per chi volesse acquistare il titolo: intervenire oltre 3,25 per gli obiettivi a 3,50 e 3,75 euro, stop sotto 3,10
Per chi detiene attualmente il titolo: mantenere aperte le posizioni sopra 2,85 per gli obiettivi a 3,50 e 3,75 euro

Snam prosegue sul percorso per vie laterali intrapreso ad inizio agosto con i prezzi che rimangono al di sotto della media mobile a 100 giorni, resistenza a 3,35 circa. La rottura di questa soglia fornirebbe un deciso segnale rialzista introduttivo al test 3,51, gap del 18 luglio e linea che scende dal top di marzo, ed eventualmente di area 3,60, altra resistenza di rilievo almeno in ottica di medio periodo. Sotto 3,25 le prospettive di crescita verrebbero meno, target in quel caso a 3,15 e sui minimi di luglio a 3,06.
Per chi volesse comprare il titolo intervenire alla rottura di 3,35 per il test di 3,50, stop loss a 3,25.
Per chi gia’ detiene il titolo mantenere uno stop al di sotto di 3,25, incrementare oltre 3,51 per 3,60.

HEADLINES
Rcs segna un nuovo strappo al rialzo
Al termine della seduta di ieri Rcs ha registrato un rialzo del 12,26 per cento. Da inizio settimana il titolo ha più che raddoppiato il proprio valore di Borsa ed è passato di mano il 2,45% del suo capitale. L’editore del Corriere della Sera si avvantaggia delle attese sul piano di taglio del debito e di sviluppo. Fra le ipotesi sulla strategia che il nuovo ad Pietro Scott Jovane sta mettendo a punto, quella di un aumento di capitale da 350-500 milioni di euro. Secondo alcuni osservatori sarebbe però in corso di valutazione anche la soluzione alternativa di un’emissione di bond convertibili.

CDC: nel primo semestre perdita netta da €21,6 milioni, i revisori non si esprimono sul bilancio
Il cda di CDC ha approva la relazione finanziaria consolidata al 30 giugno 2012. Il Totale dei ricavi e proventi consolidati al 30 giugno 2012 è pari a 77,2 milioni di Euro, in riduzione del 55% rispetto ai 170,7 milioni di Euro del primo semestre 2011. Il Margine Operativo Lordo (Ebitda) consolidato al 30 giugno 2012 è negativo per 12,8 milioni di Euro, in riduzione rispetto ai 1,3 milioni di Euro positivi del primo semestre 2011. Il Risultato ante imposte consolidato al 30 giugno 2012 negativo per 21,6 milioni di euro, in riduzione rispetto a quello del primo semestre 2011, negativo per 1,9 milioni di Euro. Il Risultato netto consolidato dopo le imposte al 30 giugno 2012 è stato negativo per 21,6 milioni di Euro, in riduzione rispetto al risultato del primo semestre 2011, negativo per 0,2 milioni di Euro. La Posizione Finanziaria Netta Consolidata al 30 giugno 2012 è negativa per 37,9 milioni di Euro, in miglioramento rispetto ai 44,6 milioni di Euro registrati al 30 giugno 2011

Lagardere conferma gli obiettivi per il 2012
Il gruppo media francese Lagardere ha chiuso il primo semestre con ricavi stabili a 3,38 miliardi di euro (-0,2%). L’ebit dalle operazioni ordinarie è sceso a 112 milioni di euro in calo di 56 milioni di euro su base reported. L’utile netto del gruppo è cresciuto a quota 36 milioni di euro. Il debito netto è stabile a 1,72 miliardi di euro. La società ha confermato le previsioni per l’ebit 2012 e le negoziazioni in corso sulla possibile quotazione della pay TV Canal+ controllata insieme al gruppo Vivendi. Lagardere si attende risultati positivi nella seconda metà di quest’anno.

Bce: Nowotny (Austria), acquisti sul mercato primario sarebbero problematici
Ewal Nowotny, numero uno della Banca d’Austria e membro del consiglio direttivo della Bce, ha dichiarato che sul tema degli acquisti di titoli del debito sovrano da parte della Bce non bisogna essere condizionati dall’ideologia. Quanto alle modalità degli interventi il banchiere ha però precisato che acquisti sul mercato primario, ossia direttamente dagli Stati, sarebbero però problematici.

Fed: attesa sui mercati per il discorso di oggi di Jackson Hole
Attesa stamane sui mercati per il simposio della Fed di Jackson Hole che si svolgerà nel pomeriggio. Si guarda con particolare attenzione ad ogni eventuale riferimento del presidente Ben Bernanke su di un nuovo programma di quantitative easing negli Usa.

Portogallo: al via la privatizzazione degli aeroporti
Il Portogallo vara la privatizzazione dei propri aeroporti. Si tratta di una delle misure messe a punto nel 2011 nell’ambito del piano di emergenza concordato con Unione Europea e Fondo Monetario Internazionale. Nel maggio del 2011, in particolare, il Portogallo aveva deciso di promuovere un programma di privatizzazioni da 5,5 miliardi di euro in cambio di un prestito da 78 miliardi di euro di Ue, Bce e Fmi. L’esecutivo portoghese ha approvato la legge per la privatizzazione dell’ANA Aeroportos de Portugal che portera’ al completo disinvestimento dall’operatore aeroportuale. Prevista la vendita diretta a uno o piu’ investitori nazionali o esteri, insieme ad un’offerta pubblica sul 5% del capitale riservata esclusivamente ai dipendenti. I potenziali acquirenti di ANA, società attiva negli scali di Lisbona, Porto, Faro e delle Azzorre, dovranno presentare le proprie offerte entro la fine di settembre.

Markets Await Bernanke’s Jackson Hole Speech

Despite the excellent retail sales numbers in the morning, the market gave back some recent gains due to caution ahead of speeches from central bankers at Jackson Hole. Initial jobless claims rose to 374,000 from 372,000, slightly ahead of estimates. Personal spending was a little light, only rising 0.4% compared to 0.5% estimates..

Pre-market, Ciena (CIEN) reported an earnings-per-share loss of $.04, missing estimates of a loss of $.02 per share. However, the company noted weakness for the coming quarter, citing “macro uncertainties.” The stock fell by nearly 20%.

Facebook (FB), after a very positive research note from Piper Jaffrey, remained flat on the day.

Federal Reserve Chairman Ben Bernanke will give his speech on monetary policy at 10:00 a.m. EDT. The Bank of England’s Adam Posen will give his speech at 1:15 p.m. and the head of the IMF, Christine Lagarde, will give her speech at 2:30 p.m.

In the morning, the Chicago Fed will announce the latest manufacturing numbers. Economists are expecting the index to fall to 53.5 from 53.7 last month. The University of Michigan and Reuters will release the second revision of the consumer confidence numbers, with no change expected from two weeks ago.

In Europe, Germany will report retail sales, and the eurozone will release unemployment numbers for the prior month.

CWS Market Review – August 31, 2012

August 31, 2012

“The investor’s chief problem—and even his worst enemy—is likely to be himself.” – Benjamin Graham

Even though the stock market is still in its late-summer doldrums, our Buy List stocks made some very impressive headlines this week. First, Hudson City ($HCBK) jumped 15% in one day after it announced a $3.7 billion merger agreement with M&T Bank ($MTB). Then JoS. A. Bank Clothiers ($JOSB) soared 14% thanks to a very strong earnings report. Looking at the numbers, our Buy List has had a very good August. In the last four weeks, the Buy List gained 5.9%, which is more than double the gains of the S&P 500.

As Churchill said on V-E Day, “We may allow ourselves a brief period of rejoicing.” While this month was great for our Buy List, let’s not get overconfident. This is a tough market, and there are many stocks, such as Amazon.com ($AMZN), that are extremely dangerous to own. The bond market looks shaky as well. As always, patience and discipline are our keys to success.

In this week’s CWS Market Review, I’ll bring you up to speed on the latest developments. Plus, I’ll tell you the best way to position yourself in the weeks ahead. We also had a pleasant 12.1% dividend increase from Harris Corp. ($HRS). This quiet little stock just had a remarkable run, rallying on 18 out of 21 days—and it’s still going for less than 10 times earnings. Now let’s take a closer look at the news from Hudson City and Joey Bank.

Hudson City Agrees to Merge with M&T

At the start of the week, Hudson City Bancorp said it had agreed to merge with M&T Bank ($MTB) in a deal worth $3.7 billion. Shares of HCBK jumped 15.7% on Monday.

I have to confess some embarrassment, since I had actually been down on HCBK and recently lowered the stock to a “hold.” The board members at M&T apparently aren’t subscribers to CWS Market Review. The merger between MTB and HCBK is interesting for several reasons. One is that this is the largest bank merger since Dodd-Frank came into effect. I think banks have been understandably reluctant to do any large deals since the financial crisis. Regulators certainly will be paying extra-close attention to any merger.

The merger agreement allows shareholders of Hudson City to take cash or 0.08403 shares of MTB for each share of HCBK they own. Given where MTB closed last Friday, that values HCBK at $7.22 per share. Here’s another interesting twist. The acquisitor in any large deal normally sees its stock drop. But this time, shares of MTB rallied 4.6% on Monday. That really caught Wall Street’s attention. Plus, when MTB rises, it values HCBK even more. M&T closed the day on Thursday at $87 per share, which translates to $7.31 for HCBK (note that HCBK is slightly discounted relative to the merger ratio). If MTB can get to $95, which is a very fair valuation (12.4 times next year’s earnings estimate), then that would value HCBK just shy of $8. I’m not saying it will happen, but it’s a very plausible scenario.

The merger agreement calls for the total payment from MTB to be 60% in stock and 40% in cash, so individual shareholders may not get the exact allocation they want. It all depends on what the balance of HCBK shareholders say (here’s a transcript of the conference call).

My recommendation for HCBK holders is to take shares of MTB. That’s what we’re going to do on the Buy List. M&T is a good bank, and it pays a decent dividend. M&T hasn’t had a losing quarter in 36 years. They were also one of the very few large banks to maintain their dividend through the financial crisis.

Bear in mind that we’re not in any hurry to exchange our shares. According to the conference call, the banks are looking to wrap up the deal by the second quarter of next year. That’s between seven and ten months away. I should remind you that any deal, no matter how solid it looks, does have a chance of falling apart. It’s certainly not likely, but the odds aren’t zero either. On the conference call, management said they hope to maintain Hudson’s dividend, but they need to hear from the regulators. For now, I rate Hudson City a good buy any time the shares are below $7.50.

Joey Bank Soars on Strong Earnings

On Wednesday, JoS. A. Bank Clothiers stunned everybody, including me, by reporting very strong earnings. The stock vaulted 14% that day, which came on the heels of a 3.5% rally on Tuesday. If you recall from last week’s CWS Market Review, I was rather skeptical of this earnings report.

For JOSB’s fiscal second quarter, they earned 83 cents per share, which was 10 cents more than Wall Street’s consensus. At one point on Wednesday, JOSB was up close to 19%. If you recall, the last earnings report was a dud. While the recent rally is impressive, JOSB is really taking back a lot of the ground it lost during the spring. It appears that short-sellers were ganging up on JOSB, and once the strong earnings came out, they got routed. The shorts then had to cover their positions and that drove the stock even higher, which in turn caused more shorts to scramble for the exits. That’s not a fun game to play.

Looking at the numbers in the earnings report, JOSB did quite well. Total sales rose by 12.9% to $260.3 million. That was almost $10 million more than Wall Street had been expecting. Sales at JOSB’s direct marketing segment, which includes internet sales, rose over 39%. The important metric in retailing, same-store sales, saw an impressive rise of 6.1%.

I was pleased to hear that JoS. A. Bank has very ambitious plans for the future. The company hopes to open 45 to 50 stores this fiscal year and next year as well. I’m going to raise my buy price on JOSB to $50. I also want to warn you to expect a bit of volatility from this stock. If that unnerves you, it may be best to stay away.

Harris Corp. Is a Buy up to $50

One of the biggest surprises this year has been the performance of Harris Corp. ($HRS). The company, which makes communication equipment, was a new addition to this year’s Buy List, but I don’t think I could have imagined that it would be our best-performing stock so far this year. Through Thursday’s trading, Harris is up 30.7% since the start of the year for us.

On Wednesday, Harris announced that it’s raising its quarterly dividend by 12.1%. This is their second dividend increase this year. Six months ago, Harris raised its dividend from 28 cents to 33 cents per share. Now it’s rising to 37 cents per share. That makes the current yield 3.1%, which is more than a 30-year Treasury.

Some Buy-List Bargains

As I said last week, I’m expecting a minor pullback over the next few weeks. Nothing big, but we may shed a few points here and there. In fact, the S&P 500 closed just below 1,400 on Thursday. There are good buys out there. I want to highlight a few stocks on our Buy List that look especially good right now.

Oracle’s ($ORCL) earnings, for example, are only a few weeks away. I’m expecting more good news. Ford ($F) and Moog ($MOG-A) are pretty cheap here. If volatility doesn’t bother you, then JPMorgan Chase ($JPM) is a strong buy.

That’s all for now. The stock market will be closed on Monday for Labor Day. Next week, we’ll get some important economic reports, such as the ISM and productivity reports, and the big jobs report comes next Friday. Be sure to keep checking the blog for daily updates. I’ll have more market analysis for you in the next issue of CWS Market Review!

- Eddy


Named by CNN/Money as the best buy-and-hold blogger, Eddy Elfenbein is the editor of Crossing Wall Street. His free Buy List has beaten the S&P 500 for the last five years in a row. This email was sent by Eddy Elfenbein through Crossing Wall Street.

MARKET TALK: borse; cautela in avvio, focus su Bernanke

MILANO (MF-DJ)–Previsto un avvio senza spunti di rilievo per le borse europee in attesa del discorso di Ben Bernanke a Jackson Hole. La domanda piu’ interessante da porsi, affermano da Fxcm Italy, resta comunque quella relativa ai possibili scenari derivanti dall’annuncio (anche implicito) da parte della Fed di un nuovo possibile allentamento monetario o comunque, in caso negativo, sara’ importante analizzare il wording dello stesso Bernanke. Nel primo caso, precisano gli esperti, si assisterebbe a massicci acquisti di rischio e quindi movimenti contro dollaro soprattutto; con un euro/usd che potrebbe andare alla caccia delle resistenze importanti poste in area 1,27 e in maniera simile si comporterebbe l’oro che potrebbe schizzare in area 1700 dollari l’oncia. Se invece non verranno fornite informazioni in questo senso, sara’ probabile assistere ad acquisti generalizzati di biglietto verde e yen su tutti, e contestuali vendite di valute e asset a piu’ alto rendimento. A Piazza Affari attenzione a Saipem dopo che Credit Suisse ha alzato il rating ad outperform da neutral e – tra i bancari – a B.Mps in scia alle parole dell’a.d. Fabrizio Viola sulle riorganizzazioni interne per ridurre i costi. Occhi puntati, ancora una volta, su Rcs sempre in forte rally ieri. Secondo la Consob, comunque, si tratta solo di ‘day-trading’. fus marco.fusi@mfdowjones.it

MONETARIO – Cosa succede oggi venerdì 31 agosto

* Archiviata con successo la tornata d’aste di fine mese, in cui il Tesoro ha collocato circa 20 miliardi di euro senza problemi, grazie alla prospettiva di un intervento della Banca centrale europea, le attenzioni degli operatori si concentrerannosul quadro macroeconomico dell’Italia, di cui ieri Moody’s ha rivisto al ribasso le stime di crescita per il 2012 e il 2013. In arrivo stamane dall’Istat i numeri relativi alla disoccupazione in luglio. Gli economisti si aspettano che il tasso deisenza lavoro tocchi un nuovo record della serie (iniziata nel 2004), portandosi al 10,9% dal 10,8% di luglio.

* Poco incoraggianti anche le previsioni riguardo l’inflazione, di cui Istat diffonderà i preliminari di agosto. Secondo gli economisticoinvolti in un sondaggio Reuters, i rincari nel comparto energetico, carburanti in testa, arresteranno il trend discendente dell’inflazione: le stime indicano, per il dato nazionale, un’inflazione congiunturale in salita allo 0,3% dallo 0,1% diluglio mentre, su base tendenziale, la rilevazione è vista stabile sul 3,1% del mese precedente.

* Indicazioni sulle prossime mosse di politica monetaria della Fed arriveranno dal forum di Jackson Hole, il cui focus principale sarà l’interventodi Bernanke, da cui gli investitori si attendono chiarimenti in merito a nuove possibili misure di stimolo all’economia. Le aspettative di un nuovo round di ‘quantitative easing’ già a settembre da parte dell’istituto centrale americano sembranoessersi raffreddate nelle ultime due settimane alla luce di una serie di dati macroeconomici migliori delle attese.

* Anche in questa chiave andranno letti una serie di indicatori sullo stato dell’economia in arrivo oggi dagli Stati Uniti, tra cui l’indice Pmi Chicago che, secondo le attese degli analisti nel mese di agosto, dovrebbe portarsi a 53,5 da 53,7 di luglio, confermandosi in espansione. Da segnalare anche l’indice di fiducia dei consumatori elaborato dall’Università del Michigan e Reuters, che le attese vedono stabile a 73,6.

* Ma il grande assente a Jackson Hole sarà Draghi che, forte del supporto della Merkel, è impegnato nella messa a punto della strategia della Bce per allentare la tensione sui titoli di Stato diSpagna e Italia, in vista del cruciale meeting di politica monetaria della prossima settimana. Ulteriori spunti al mercato potranno arrivare dall’intervento di Coeure da Parigi, mentre Nowotny, parlando ieri sera da Alpbach, ha indicato un quadro diincertezza economica per l’Europa in “enorme” aumento, specie per i paesi in difficoltà sul fronte debitorio.

* Secondo il membro tedesco dell’Esecutivo Bce Asmussen, gli acquisti da parte della banca centrale di titoli di Stato di paesi indifficoltà dovrebbero realizzarsi solo se il Fmi venisse coinvolto nella definizione dei programmi di riforma economica per i paesi stessi. Programmi che rappresenterebbero la condizione per l’intervento di Francoforte. Secondo Asmussen, sotto talicondizioni, i fondi salva-stati europei potrebbero intervenire a loro volta con acquisti di bond sul mercato primario a favore di quei paesi che abbiano in precedenza richiesto sostegno finanziario.

* No comment ufficiale della Bundesbank a quanto riportato dal quotidiano tedesco Bild, secondo cui il numero uno della Bundesbank Weidmann ha valutato più volte le proprie dimissioni a causa dei contrasti con la linea della Bce. Secondo il quotidiano sarebbe stato il governo a persuadere ilbanchiere centrale a rimanere. Weidmann, aggiunge, avrebbe per ora rimandato la decisione e si prepara a dare battaglia al piano di acquisto bond di Draghi nel meeting Bce del 6 settembre.

* Intanto la commissione Ue sta studiando un piano peraffidare alla Bce la supervisione di tutto il settore bancario della zona euro. Lo dice l’eurocommissario Barnier in un’intervista al Sole 24 Ore e ad altri quotidiani europei. Il piano, spiega Barnier, prevede la supervisione da parte di Francofortesu tutte le banche che si sono rivolte all’Esm a partire dal prossimo gennaio, su tutte quelle rilevanti per il sistema finanziario a partire da luglio e, dal 2014, su tutte le altre. I paesi non euro possono sottoporre volontariamente la supervisione delle proprie banche alla Bce.

* Rimanendo in Europa, il governo spagnolo approverà oggi le linee guida che regolamenteranno la creazione della ‘bad bank’, il veicolo con cui Madrid si propone di isolare gli asset tossici del propriosettore finanziario. Si tratta di un passo fondamentale verso il bailout concordato con l’Ue, che a giugno ha garantito fino a 100 miliardi di euro per mettere in sicurezza gli istituti iberici.

* Calo inatteso per la produzione industrialegiapponese in luglio con un -1,2% (dopo il +0,4% di giugno) a fronte di attese per un dato positivo dell’1,7%. A peggiorare la percezione del quadro del settore, l’indice Pmi manifatturiero giapponese scende ai minimi da 16 mesi, a 47,7 punti inagosto dai 47,9 di luglio. Tra gli altri dati di oggi dall’economia giapponese, la disoccupazione, stabile al 4,3% in luglio e la spesa delle famiglie, sempre in luglio, in aumento dell’1,7% annuo, oltre le attese di un +1,2%. Sul fronte prezzi,l’indice Cpi si è contratto in luglio dello 0,3% su base annua, in linea con le previsioni: si tratta comunque del terzo dato negativo consecutivo, che conferma le difficoltà dell’inflazione di avvicinarsi al target dell’1% fissato dalla Banca delGiappone al consumo nazionali luglio. Nell’area di Tokyo, di cui vengono diffusi i dati del mese successivo alla rilevazione nazionale, l’indice Cpi ha segnato un calo dello 0,5% annuo in agosto (su stime per un -0,6%).

* Poco mosso il greggio,che si avvia comunque a chiudere il secondo mese consecutivo con un rialzo netto. L’attesa, per ora, va a quello che dirà nel pomeriggio Bernanke da Jackson Hole, con particolare attenzione ad ogni eventuale riferimento ad un nuovo programma diquantitative easing. Alle 7,30 italiane il future Brent <LCOc1> tratta a 112,72 dollari il barile (+0,07) mentre il Nymex a 94,57 dollari (-0,05).

* Clima di nervosa attesa anche sul mercato valutario, con l’euro che intanto arranca sui minimidella settimana sul dollaro, complice anche il recente calo degli indici azionari europee ai livelli più bassi da circa un mese. L’euro/dollaro <EUR=> tratta a 1,2502/05 da 1,2504 dell’ultima chiusura; euro/yen <EURJPY=> a 98,07/12 da 98,30;dollaro/yen <JPY=> a 78,45/47 da 78,60.

* Stabili le quotazioni dei Treasury Usa, con gli investitori che ovviamente guardano alle possibili novità in arrivo oggi da Jackson Hole. L benchmark decennale <US10YT=RR> sale di 1/32, rendimentoall’1,627%.

DATI MACROECONOMICI ITALIA
* Istat, stima occupati e disoccupati luglio (10,00) – attesa 10,9%.

* Istat, stima occupati e disoccupati 2° trimestre (10,00).

* Istat, stima prezzi al consumo agosto (11,00) – attesa dato Nic0,3% m/m; 3,1% a/a; dato Ipca 0,3% m/m; 3,6% a/a.

* Istat, prezzi alla produzione luglio (12,00) – attesa 0,3% m/m.

GERMANIA
* Vendite al dettaglio luglio (8,00) – attesa 0,2% m/m; 0,4% a/a.

GRECIA
* Vendite al dettaglio giugno (11,00). SPAGNA
* Vendite al dettaglio luglio (9,00).

ZONA EURO
* Stima prezzi al consumo luglio (11,00) – attesa 2,5% a/a.

* Disoccupati luglio (11,00) – attesa 11,3%.

USA
* Pmi Chicago agosto (15,45) – attesa 53,5.

* Fiducia consumatoriUniv.Michigan/Reuters agosto (15,55) – attesa 73,6.

* Revisioni nuovi ordinativi luglio (16,00).

* Revisione beni durevoli luglio (16,00).

* Ordini all’industria luglio (16,00) – attesa 1,9%.

BANCHE CENTRALI USA e GRAN BRETAGNA
* AJackson Hole interventi Bernanke sulla politica monetaria dalla crisi (16,00); Haldane (18,00) e Posen (19,10) della Boe.

ZONA EURO
* Ad Alpbach interventi Ittner (banca centrale Austria) su supervisione bancaria (9,00) e Nowotny (Bce) su “Fondi: come si finanzieranno le banche?” (11,00).

* A Parigi intervento Coeure a sessione plenaria Medef (11,00).

AGENDA – Appuntamenti di venerdì 31 agosto

ITALIA
* Cell Therapeutics, assemblea annuale (19,00 a Seattle 10,00).

ROMA
* Istat, stima occupati e disoccupati luglio e 2° trimestre (10,00).

* Istat, stima prezzi al consumo agosto (11,00).

* Istat, prezzi alla produzione luglio(12,00).

* Api-Anonima Petroli Italiana, assemblea ordinaria aumento numero componenti Cda, 2° conv (12,30).

EUROPA BRUXELLES
* Stima prezzi al consumo e disoccupati luglio zona euro (11,00).

ALPBACH
* Interventi Ittner (bancacentrale Austria) su supervisione bancaria (9,00) e Nowotny (Bce) su “Fondi: come si finanzieranno le banche?” (11,00).

ATENE
* Vendite al dettaglio giugno (11,00).

BERLINO
* Vendite al dettaglio luglio (8,00).

MADRID
* Vendite aldettaglio luglio (9,00).

* Governo, attesa approvazione framework per la bad bank.

PARIGI
* Intervento Coeure a sessione plenaria Medef (11,00).

* Bolloré, Hermes, risultati trim2.

GINEVRA
* Meeting Wto.

USA WASHINGTON
* PmiChicago agosto (15,45).

* Fiducia consumatori Univ.Michigan/Reuters agosto (15,55).

* Revisioni nuovi ordinativi, revisione beni durevoli, ordini all’industria luglio (16,00).

JACKSON HOLE
* Interventi Bernanke sulla politica monetaria dallacrisi (16,00); Haldane (18,00) e Posen (19,10) della Boe.

GIAPPONE TOKYO
* Pmi manifatturiero agosto (1,13).

* Prezzi al consumo nazionali luglio e Tokyo agosto, disoccupati luglio (1,30).

* Stima produzione industriale luglio (1,50).

Cabot Wealth Advisory 8/30/12 – Eight Stupid Rules that are a Drag on the U.S.

As publisher of the Cabot newsletters, I have a little more license than most of the contributors of these Cabot Wealth Advisories to let my mind roam. Today we roam in eight different directions, surveying what might loosely be titled “Eight Stupid Rules that are a Drag on the U.S. Economy” before finishing, as usual, with a timely investment recommendation.

#1.  The American Rule
Americans litigate far more often than the residents of other countries. In fact, the share of our economy spent on litigation is at least twice that of Germany, France, England and Northern Ireland, respectively. Why? Because our system of risks and rewards is screwed up. In every other country in the world, the loser pays at least part of the other party’s legal fees; this rule not only inhibits the filing of nuisance suits with little merit, it helps encourage law-abiding behavior. In the U.S., however, the American Rule encourages the filing of nuisance suits that clog the court system, rewarding above all the lawyers. That’s one reason the U.S. has more lawyers per capita than any other country; there’s a lawyer for every 265 Americans. And because the people who “run” the country in Washington are generally lawyers, there’s little incentive to change.

#2.  The Continuing Federal Prohibition of Marijuana
Nearly a century ago, we learned that prohibiting the production, trade and consumption of goods that the public wanted diverted public money to a vast criminal black market that supplied that want–and gave us the likes of Al Capone, Machine Gun Kelly and Dutch Schultz (real name Arthur Flegenheimer). Today we have the same situation with marijuana. Polls show that 56% of Americans support legalizing and regulating cannabis (the tax revenue would be substantial) and 80% support medical marijuana. Yet an estimated $30 billion a year continues to go to law enforcement to fight the drug war, in the process perpetuating lawlessness on both sides of our Mexican border.

#3.  The U.S. Postal Service Monopoly
Thanks to the Internet, the U.S. Postal Service has become a slow-motion train wreck. In response, the U.S.P.S. is cutting costs–by reducing service to its customers!–but doing nothing to address the main problem. And Congress just kicks the can down the road. The radical solution is to free the U.S.P.S. from its outdated mission and to allow free-market competition so we all get better service.

#4. Taxi Medallions
The conceit that city fathers know best how many cabs is the right number ignores the wisdom of the free market and perpetuates a market that makes medallions so expensive only professional companies can afford them … which raises costs for customers.

#5.  Liquor Licenses
Ditto.

#6. Immigration Laws
Forget about the problems at the Mexican border. Ignore the Miami/Cuba issue. The real tragedy of our immigration laws is that we continue to force visitors who graduate from our excellent colleges to return to their home countries! This brain drain–particularly in math and science–weakens American competitiveness while strengthening other countries. Even Bill Gates couldn’t get Washington to act, though signs are that change will be achieved eventually.

#7. Ethanol and CAFE laws
The requirement that ethanol be added to gasoline has made corn–and everything made from corn–more expensive, while contributing to the global food crisis. And the labyrinthine Corporate Average Fuel Economy (CAFE) requirements have forced us to drive smaller, lighter, less safe cars or trucks and SUVs (which remain exempt) rather than giving us the choice of keeping safer heavy cars and driving less. If these laws were repealed, and replaced by a simple national gas tax, we’d have cleaner air, cheaper food and more choices!

#8. The Farm Bill
Born as a helping hand for struggling small farmers, it now rewards the largest professional agricultural companies like Butterball, Tyson, Sunkist, Cargill and Monsanto. It encourages the production of junk food–through subsidies for sugar, corn and high-fructose corn syrup–thus contributing to the epidemic of obesity and diabetes in the U.S. And it includes the Supplemental Nutrition Assistance Program (formerly known as food stamps), which is a nice idea but poorly implemented; I recently stood in line behind a woman who used hers to buy a jug of wine. (It was made by Gallo, one of those large agricultural companies that know how to play the game in Washington.)

Now here’s a question for you.

Which of these eight “Stupid Rules” bothers you the most?

Which do you disagree on?

If you let me know, I’ll tabulate the votes, report the results next week, and write more about the top issues! Just hit the reply button and let me know.

Moving on to investing, we’ve now had 10 solid weeks of upside market action. The Advance-Decline line has been strong. The number of stocks hitting new lows has shrunk to bull market levels. And market leadership has shifted from defensive sectors like utilities, food and big medical to growth-oriented sectors like semiconductors, e-commerce and specialty retail.

Yet the man on the street is far from bullish! Economic uncertainty remains the order of the day! True, the European situation appears less perilous than it did previously, but worries about the future of the U.S.–including Medicare, tax rates, employment rates, the price of gasoline and more–are so all-consuming that there is little interest in the stock market!

Which, in the perverse logic of Wall Street, means there are likely many more months of upside ahead for this bull market!

But where to invest?

Some of the greatest growth sectors in this market, as in previous bull markets, involve the companies that make the Internet hum, from chipmakers to interface hardware makers to companies that promise security to companies that run the software and hardware that make up the cloud.

One of my favorites today is oddly-named SolarWinds (SWI), which is in neither the solar nor the winds business.

Here’s what Monday’s recommendation in Cabot Top Ten Trader said:

“With four appearances in 2011 and five (so far) in 2012, SolarWinds is making quite a mark in Cabot Top Ten Trader. The company’s lineup of IT management software is very attractive to the people who manage corporate computer networks, reducing system downtime, increasing performance and monitoring patches, settings and memory storage. The company’s appeal shows up in its consecutive years of 30% revenue growth in 2010 and 2012 and its 40% revenue bump in Q2. The company’s after-tax profit margin of 38.7% in Q2 is just the latest of 14 quarters of margins greater than 30%. SolarWinds has more than 95,000 customers worldwide, ranging from Fortune 500 companies to small businesses. Customers are often attracted by the free downloads of the company’s software, then sign on for licenses (which accounted for 47% of 2011 revenues) and maintenance and other services that brought in the other 53%. And they stay signed on, leading to a stream of recurring revenue.”

SWI’s chart features two big spikes higher this year, both sparked by unexpectedly strong earnings releases, the latest of which was in early August. Since then, the stock has consolidated that gain, trading between 52 and 56, with an upward bias. In the meantime, the stock’s 25-day moving average has caught up, and now lends support (the 50-day moving average is down at 49).

If the story appeals to you, you could simply jump on board here (hopefully after researching the company more thoroughly for yourself). Even better, you could take a trial subscription to Cabot Top Ten Trader and keep abreast of editor Mike Cintolo’s latest recommendation on SWI, as well as other high-potential leading stocks. Details here.

Yours in pursuit of wisdom and wealth,

Tim signature

Timothy Lutts
Editor of Cabot Stock of the Month

Thursday S&P -11.01 DOW -106.77 Gold -2.80 NAS -31.81 USD +0.150 CRB -0.61

E X T R E M E   M A R K E T   C O M M E N T A R Y
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STOCK INDEXES & MARKETS http://quotes.ino.com/exchanges/?c=indexes+

The September NASDAQ 100 closed sharply lower on Thursday and tested the
lower boundary of its two-week old trading range. The low-range close sets the
stage for a steady to lower opening when Friday’s night session begins trading.
Stochastics and the RSI are neutral to bearish hinting that a short-term top
might be in or is near. Closes below the 20-day moving average crossing at
2745.93 would confirm that a short-term top has been posted. If September
renews the rally off June’s low, monthly resistance crossing at 2847.00 is the
next upside target. First resistance is last Tuesday’s high crossing at
2802.50. Second resistance is monthly resistance crossing at 2847.00. First
support is the 20-day moving average crossing at 2745.93. Second support is the
25% retracement level of the June-August rally crossing at 2707.37.

The September S&P 500 closed lower on Thursday and below the 20-day moving
average crossing at 1404.23 confirming that a short-term top has been posted.
The low-range close sets the stage for a steady to lower opening when Friday’s
night session begins trading. Stochastics and the RSI remain bearish signaling
that sideway to lower prices are possible near-term. If September extends
today’s decline, the 25% retracement level of the June-August rally crossing at
1383.52 is the next downside target. Closes above Monday’s high crossing at
1415.90 would signal that a short-term low has been posted. First resistance is
August’s high crossing at 1424.60. Second resistance is weekly resistance
crossing at 1472.56. First support is today’s low crossing at 1395.40. Second
support is the 25% retracement level of the June-August rally crossing at
1383.52.

The Dow closed lower on Thursday and spiked below the 25% retracement level
of the June-August rally crossing at 13,006 over European debt concerns. The
mid-range close sets the stage for a steady to lower opening on Friday.
Stochastics and the RSI remain bearish signaling that sideways to lower prices
are possible near-term. If the Dow extends the decline off August’s high, the
38% retracement level of the aforementioned rally crossing at 12,835 is the
next downside target. Closes above the 20-day moving average crossing at 13,158
would signal that a short-term low has been posted. First resistance is the
20-day moving average crossing at 13,158. Second resistance is August’s high
crossing at 13,330. First support is today’s low crossing at 12,978. Second
support is the 38% retracement level of the aforementioned rally crossing at
12,835.
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INTEREST RATES http://quotes.ino.com/exchanges/?c=interest

September T-bonds closed up 17/32’s at 149-16.

September T-bonds closed higher on Thursday as it extends the rally off
August’s low. The high-range close sets the stage for a steady to higher
opening on Friday. Stochastics and the RSI are overbought but remain neutral to
bullish signaling that sideways to higher prices are possible near-term. If
September extends the aforementioned rally, the reaction high crossing at
152-04 is the next upside target. Closes below the 10-day moving average
crossing at 147-30 would temper the near-term friendly outlook. First
resistance is today’s high crossing at 149-27. Second resistance is the
reaction high crossing at 152-04. First support is the 10-day moving average
crossing at 147-30. Second support is August’s low crossing at 145-03.

ENERGY MARKETS http://quotes.ino.com/exchanges/category.html?c=energy

October crude oil closed lower on Thursday below the 20-day moving average
crossing at 94.83. The mid-range close sets the stage for a steady to lower
opening when Friday’s night session begins. Stochastics and the RSI are bearish
signaling that sideways to lower prices are possible near-term. Multiple closes
below the 20-day moving average crossing at 94.83 would confirm that a top and
trend change has been posted. If October renews the rally off June’s low, the
75% retracement level of this year’s decline crossing at 102.50 is the next
upside target. First resistance is August’s high crossing at 98.29. Second
resistance is the 75% retracement level of this year’s decline crossing at
102.50. First support is the 20-day moving average crossing at 94.83. Second
support is the reaction low crossing at 91.97.

October heating oil closed higher due to short covering on Thursday. The
high-range close sets the stage for a steady to higher opening when Friday’s
session begins trading. Stochastics and the RSI are neutral to bearish hinting
that a short-term top might be in or is near. Closes below the 20-day moving
average crossing at 307.66 would confirm that a short-term top has been posted.
If October extends the rally off June’s low, the 87% retracement level of the
March-June decline crossing at 323.99 is the next upside target. First
resistance is Monday’s high crossing at 319.15. Second resistance is the 87%
retracement level of the March-June decline crossing at 323.99. First support
is the 10-day moving average crossing at 312.38. Second support is the 20-day
moving average crossing at 307.66.

October unleaded gas closed slightly lower on Thursday as it extends this
week’s decline. The mid-range close sets the stage for a steady opening when
Friday’s night session begins trading. Stochastics and the RSI are bearish
signaling that sideways to lower prices are possible near-term. Closes below
the 20-day moving average crossing at 285.94 are needed to confirm that a
short-term top has been posted. If October extends the rally off June’s low,
March’s high crossing at 304.02 is the next upside target. First resistance is
Monday’s high crossing at 300.98. Second resistance is March’s high crossing at
304.02. First support is the 20-day moving average crossing at 285.94. Second
support is the 25% retracement level of the June-August rally crossing at
280.95.

October Henry natural gas closed higher due to short covering on Thursday as
it consolidated some of the decline off July’s high. The high-range close sets
the stage for a steady to higher opening on Friday. Stochastics and the RSI are
oversold and are turning neutral to bullish signaling that a short-term. Closes
above the 20-day moving average crossing at 2.814 are needed to confirm that a
low has been posted. If October extends the decline off July’s high, the 75%
retracement level of the April-July rally crossing at 2.546 is the next
downside target. First resistance is the 20-day moving average crossing at
2.814. Second resistance is the reaction high crossing at 3.135. First support
is Wednesday’s low crossing at 2.610. Second support is the 75% retracement
level of the April-July rally crossing at 2.546.

CURRENCIES http://quotes.ino.com/exchanges/category.html?c=currencies

The September Dollar closed higher due to short covering on Thursday as it
consolidated some of the decline off July’s high. The high-range close sets the
stage for a steady to higher opening on Friday. Stochastics and the RSI are
oversold but remain neutral to bearish signaling that sideways to lower prices
are possible near-term. If September extends the decline off July’s high, the
62% retracement level of the April-July rally crossing at 81.02 is the next
downside target. Closes above the 20-day moving average crossing at 82.14 are
needed to confirm that a short-term low has been posted. First resistance is
the 10-day moving average crossing at 81.78. Second resistance is the 20-day
moving average crossing at 82.14. First support is last Thursday’s low crossing
at 81.22. Second support is the 62% retracement level of the April-July rally
crossing at 81.02.

The September Euro closed lower on Thursday as it extends the trading range
of the past six days. The low-range close sets the stage for a steady to lower
opening on Friday. Stochastics and the RSI are overbought but remain neutral to
bullish signaling that sideways to higher prices are possible near-term. If
September renews the rally off July’s low, the 38% retracement level of this
year’s decline crossing at 126.07 is the next upside target. Closes below the
20-day moving average crossing at 124.18 would confirm an end to the rally off
July’s low. First resistance is last Thursday’s high crossing at 125.93. Second
resistance is the 38% retracement level of this year’s decline crossing at
126.07. First support is the 10-day moving average crossing at 124.87. Second
support is the 20-day moving average crossing at 124.18.

The September British Pound posted a key reversal down on Thursday and the
low-range close sets the stage for a steady to lower opening when Friday’s
night session begins trading. Stochastics and the RSI are bearish signaling
that a short-term top might be in or is near. Closes below the 20-day moving
average crossing at 1.5729 would confirm that a short-term top has been posted.
If September extends the rally off June’s low, the 75% retracement level of the
April-June decline crossing at 1.6024 is the next upside target. First
resistance is last Thursday’s high crossing at 1.5912. Second resistance is the
75% retracement level of the April-June decline crossing at 1.6024. First
support is the 20-day moving average crossing at 1.5729. Second support is the
reaction low crossing at 1.5635.

The September Swiss Franc closed lower on Thursday as it extends the trading
range of the past six days. The low-range close sets the stage for a steady to
lower opening when Friday’s night session begins trading. Stochastics and the
RSI are overbought but remain neutral to bullish signaling that sideways to
higher prices are possible near-term. If September extends the rally off July’s
low, the 50% retracement level of this year’s decline crossing at .10627 is the
next upside target. Closes below the 20-day moving average crossing at .10341
would confirm that a short-term top has been posted. First resistance is last
Thursday’s high crossing at .10488. Second resistance is the 50% retracement
level of this year’s decline crossing at .10627. First support is the 10-day
moving average crossing at .10399. Second support is the 20-day moving average
crossing at .10341.

The September Canadian Dollar closed lower on Thursday and below the 20-day
moving crossing at 100.77. The low-range close sets the stage for a steady to
lower opening when Friday’s night session begins trading. Stochastics and the
RSI remain neutral to bearish signaling that sideways to lower prices are
possible near-term. Closes below the reaction low crossing at 100.46 would
confirm that a short-term top has been posted. If September renews the rally
off June’s low, April’s high crossing at 101.68 is the next upside target.
First resistance is last Tuesday’s high crossing at 101.55. Second resistance
is April’s high crossing at 101.68. First support is the 20-day moving average
crossing at 100.77. Second support is the reaction low crossing at 100.46.

The September Japanese Yen closed higher on Thursday as it extends the
trading range of the past five days. The mid-range close sets the stage for a
steady opening when Friday’s night session begins trading. Stochastics and the
RSI remain neutral to bullish signaling that sideways to higher prices are
possible near-term. If September renews last week’s rally, July’s high crossing
at .12854 is the next upside target. If September renews this month’s decline,
the reaction low crossing at .12514 is the next downside target. First
resistance is last Wednesday’s high crossing at .12778. Second resistance is
July’s high crossing at .12854. First support is last Monday’s low crossing at
.12556. Second support is the reaction low crossing at .12514.

PRECIOUS METALS http://quotes.ino.com/exchanges/?c=metals

October gold closed lower on Thursday as it consolidates below the
2011-2012-downtrend line crossing near 1671.80. The low-range close sets the
stage for a steady to lower opening when Friday’s night session begins trading.
Stochastics and the RSI are overbought and are turning neutral to bearish
hinting that a short-term top might be in or is near. Closes below the 20-day
moving average crossing at 1631.60 would confirm that a short-term top has been
posted. If October renews the rally off August’s low, the 38% retracement level
of the 2011-2012-decline crossing at 1683.10 is the next upside target. First
resistance is Monday’s high crossing at 1677.10. Second resistance is the 38%
retracement level of the 2011-2012-decline crossing at 1683.10. First support
is the 10-day moving average crossing at 1651.60. Second support is the 20-day
moving average crossing at 1631.60.

September silver closed lower due to profit taking on Thursday as it
consolidates some of the rally off June’s low. The low-range close set the
stage for a steady to lower opening when Friday’s night session begins trading.
Stochastics and the RSI are overbought but remain neutral to bullish signaling
that sideways to higher prices are possible near-term. If September extends the
rally off June’s low, the 50% retracement level of this year’s decline crossing
at 31.797 is the next upside target. Closes below the 20-day moving average
crossing at 28.966 would confirm that a short-term top has been posted. First
resistance is Monday’s high crossing at 31.225. Second resistance is the 50%
retracement level of this year’s decline crossing at 31.797. First support is
the 10-day moving average crossing at 29.978. Second support is the 20-day
moving average crossing at 28.966.

September copper closed higher on Thursday however, the low-range close sets
the stage for a steady to lower opening when Friday’s night session begins
trading. Stochastics and the RSI are turning bearish signaling that a
short-term top might be in or is near. Closes below the 20-day moving average
crossing at 341.88 would confirm that a short-term top has been posted. If
September renews the rally off August’s low, July’s high crossing at 355.65 is
the next upside target. From a broad perspective, September copper remains
locked in a three-month trading range. Closes above July’s high crossing at
355.65 or below July’s low crossing at 325.00 are needed to confirm a breakout
of the aforementioned trading range and point the direction of the next
trending move. First resistance is the reaction high crossing at 354.50. Second
resistance is July’s high crossing at 355.65. First support is the 20-day
moving average crossing at 341.88. Second support is the reaction low crossing
at 328.85.

FOOD & FIBER http://quotes.ino.com/exchanges/category.html?c=food

September coffee close lower due to profit taking on Thursday and the
low-range close sets the stage for a steady to lower opening on Friday.
Stochastics and the RSI remain bullish signaling that sideways to higher prices
are possible near-term. If September extends this week’s rally, the reaction
high crossing at 17.78 is the next upside target. Closes below the 10-day
moving average crossing at 16.28 would temper the friendly outlook.

September cocoa closed higher on Thursday as it extends this summer’s rally.
The mid-range close sets the stage for a steady opening on Friday. Stochastics
and the RSI are bullish signaling that sideways to higher prices are possible
near-term. If September extends the rally off June’s low, weekly resistance
crossing at 28.10 is the next upside target. Closes below the 20-day moving
average crossing at 24.69 would confirm that a short-term top has been posted.

October sugar closed higher due to short covering on Thursday as it
consolidates some of the decline off July’s high. The low-range close set the
stage for a steady to lower opening on Friday. Stochastics and the RSI are
turning bullish hinting that a low might be in or is near. Closes above the
20-day moving average crossing at 20.39 would confirm that a short-term low has
been posted. If October extends the decline off July’s high, June’s low
crossing at 19.24 is the next downside target.

October cotton closed higher on Thursday and the high-range close sets the
stage for a steady to higher opening on Friday. Stochastics and the RSI are
neutral to bullish signaling that sideways to higher prices are possible
near-term. If October extends the rally off June’s low, the 38% retracement
level of this year’s decline crossing at 77.92 is the next upside target.
Closes below the reaction low crossing at 71.17 would confirm that a short-term
top has been posted.

GRAINS http://quotes.ino.com/exchanges/category.html?c=grains

December Corn closed down 5-cents at 8.08 1/2.

December corn closed lower on Thursday as it consolidated some of
Wednesday’s rally. The low-range close sets the stage for a steady to lower
opening when Friday’s night session begins trading. Stochastics and the RSI are
turning neutral to bullish signaling that sideways to higher prices are
possible near-term. If December extends the decline off last week’s high, the
reaction low crossing at 7.86 is the next downside target. Closes below the
reaction low crossing at 7.86 would open the door for a possible test of the
reaction low crossing at 7.45 1/2. If December renews the rally off August’s
low, August’s high crossing at 8.49 is the next upside target. First resistance
is August’s high crossing at 8.49. Second resistance is the July 5th measuring
gap projection of 8.54 1/2. First support is the reaction low crossing at 7.86.
Second support is the reaction low crossing at 7.45 1/2.

December wheat closed down 2 3/4-cents at 9.03.

December wheat closed lower due to profit taking on Thursday but remains
above the 10-day moving average crossing at 8.98 1/2. The low-range close sets
the stage for a steady to lower opening when Friday’s night session begins
trading. Stochastics and the RSI are turning neutral to bullish signaling that
sideways to higher prices are possible near-term. From a broad perspective,
December wheat has been forming a flat correction off July’s high. Closes above
9.53 1/4 or below 8.57 1/4 are needed to confirm a breakout of this sideways
correction and point the direction of the next trending move. First resistance
is August’s high crossing at 9.45 1/2. Second resistance is July’s high
crossing at 9.53 1/4. First support is August’s low crossing at 8.57 1/4.
Second support is the 38% retracement level of this summer’s rally crossing at
8.29 3/4.

December Kansas City Wheat closed down 6-cents at 9.16.

December Kansas City wheat closed lower due to profit taking on Thursday as
it consolidates some of Wednesday’s rally. The low-range close sets the stage
for a steady to lower opening on Friday. Stochastics and the RSI are turning
neutral to bullish signaling that sideways to higher prices are possible
near-term. If December renews the rally off August’s low, the reaction high
crossing at 9.41 1/4 is the next upside target. If December renews the decline
off July’s high, the 38% retracement level of this summer’s rally crossing at
8.38 1/4 is the next downside target. First resistance is August’s high
crossing at 9.41 1/4. Second resistance is July’s high crossing at 9.54 1/4.
First support is August’s low crossing at 8.74 1/2. Second support is the 38%
retracement level of this summer’s rally crossing at 8.38 1/4.

December Minneapolis wheat closed down 3 1/4-cents at 9.51 3/4.

December Minneapolis wheat closed lower on Thursday as it consolidates some
of Wednesday’s rally. The mid-range close sets the stage for a steady opening
when Friday’s night session begins to trade. Stochastics and the RSI are
turning bullish signaling that sideways to higher prices are possible
near-term. Closes above last week’s high crossing near 9.62 1/4 are needed to
confirm that a short-term low has been posted. If December renews the decline
off July’s high, the 50% retracement level of this summer’s rally crossing at
8.84 is the next downside target. First resistance is last week’s high crossing
at 9.62 1/4. Second resistance is the reaction high crossing near 9.84 1/2.
First support is August’s low crossing at 9.12 1/4. Second support is the 50%
retracement level of this summer’s rally crossing at 8.84.

SOYBEAN COMPLEX

November soybeans closed up 10 1/2-cents at 17.63 1/2.

November soybeans posted a new contract high on Thursday as it extends this
summer’s rally. The high-range close sets the stage for a steady to higher
opening when Friday’s night session begins trading. Stochastics and the RSI are
overbought, diverging but are turning neutral to bullish signaling that
sideways to higher prices are possible near-term. If November extends this
summer’s rally, the ascending triangle formed off July’s high projects a
potential rally to the 18.46 area. Closes below the 20-day moving average
crossing at 16.64 1/4 would confirm that a short-term top has been posted.
First resistance is today’s high crossing at 17.71 1/4. Second resistance is
the ascending triangle projection crossing at 18.46. First support is the
10-day moving average crossing at 17.19 1/4. Second support is the 20-day
moving average crossing at 16.64 1/4.

December soybean meal closed up $5.30 at $535.30.

December soybean meal posted a new contract high on Thursday as it extends
this summer’s rally. The high-range close sets the stage for a steady to higher
opening when Friday’s night session begins trading. Stochastics and the RSI are
overbought but remain neutral to bullish signaling that sideways to higher
prices are possible near-term. If December extends this week’s rally, the
ascending triangle formed off July’s high projects a rally to the 565.30 area.
Closes below the 20-day moving average crossing at 502.50 would confirm that a
short-term top has been posted. First resistance is today’s high crossing at
538.90. First support is the 20-day moving average crossing at 502.50. Second
support is the reaction low crossing at 472.00.

December soybean oil closed down 5-pts. at 57.25.

December soybean closed lower on Thursday but remains above the 87%
retracement level of this year’s decline crossing at 57.23. The mid-range close
sets the stage for a steady to higher opening when Friday’s night session
begins trading. Stochastics and the RSI are overbought and are turning neutral
to bearish hinting that a short-term top might be in or is near. Closes below
the 20-day moving average crossing at 54.71 would confirm that a top has been
posted. If December extends this month’s rally, April’s high crossing at 58.45
is the next upside target. First resistance is Monday’s high crossing at 57.85.
Second resistance is April’s high crossing at 58.45. First support is the
10-day moving average crossing at 56.24. Second support is the 20-day moving
average crossing at 54.71.

LIVESTOCK http://quotes.ino.com/exchanges/?c=livestock

October hogs closed up $0.45 at $74.15.

October hogs closed higher on Thursday as it consolidated some of this
summer’s decline. The mid-range close sets the stage for a steady to higher
opening when Friday’s night session begins trading. Stochastics and the RSI are
turning bullish signaling that a short-term low might be in or is near. Closes
above the 20-day moving average crossing at 74.95 would confirm that a
short-term low has been posted. If October extends this summer’s decline,
weekly support crossing at 67.44 is the next downside target. First resistance
is today’s high crossing at 74.50. Second resistance is the 20-day moving
average crossing at 74.95. First support is August’s low crossing at 72.30.
Second support is weekly support crossing at 67.44.

October cattle closed unchanged at 125.50.

October cattle closed unchanged on Thursday and the mid-range close sets the
stage for a steady to lower opening when Friday’s night session begins trading.
Stochastics and the RSI are oversold and turning bullish signaling that
sideways to higher prices are possible near-term. If October extends
Wednesday’s rally, August’s high crossing at 127.22 is the next upside target.
If October renews the decline off August’s high, the reaction low crossing at
122.15 is the next downside target. First resistance is today’s high crossing
at 125.95. Second resistance is August’s high crossing at 127.22. First support
is Monday’s low crossing at 123.40. Second support is the reaction low crossing
at 122.15.

October feeder cattle closed up $0.10 at $144.90.

October Feeder cattle closed higher on Thursday and the low-range close sets
the stage for a steady to lower opening when Friday’s night session begins
trading. Stochastics and the RSI are bullish signaling that sideways to higher
prices are possible near-term. If October renews the rally off July’s low, the
38% retracement level of this summer’s decline crossing at 147.92 is the next
upside target. Closes below the 20-day moving average crossing at 143.11 are
needed to confirm that a short-term top has been posted. First resistance is
the 38% retracement level of the June-July decline crossing at 147.92. Second
resistance is the 50% retracement level of the June-July decline crossing at
150.91. First support is the 20-day moving average crossing at 143.11. Second
support is July’s low crossing at 138.30.

______________________________

______________________________________________

E X T R E M E   F U T U R E S
____________________________________________________________________________

Updated every 10 minutes around the clock.
More at http://quotes.ino.com/analysis/extremes/futures/

WINNERS

BCX.U13 SOYBEANS CRUSH INDEX Sep 2013                72.5       6.0  +9.02
NG.X12  NATURAL GAS Nov 2012                        2.919     0.052  +1.81
CSI.F13 SOYBEAN-CORN PRICE RATIO Jan 2013           2.078     0.032  +1.56
LH.Z12  LEAN HOGS Dec 2012                         71.800     0.775  +1.09
SM.U12  SOYBEAN MEAL Sep 2012                       549.0       5.7  +1.05
YK.X12  SOYBEAN (MINI) Nov 2012                    1763.5      10.5  +0.60
LB.X12  LUMBER (RANDOM LENGTH) Nov 2012             284.7       1.4  +0.49
S.X12   SOYBEANS Nov 2012                            1761         8  +0.46
US.U12  T-BONDS Sep 2012                        149.62500   0.65625  +0.44
HO.X12  HEATING OIL Nov 2012                       3.1337 0.0105  +0.34

LOSERS

BCX.F13 SOYBEANS CRUSH INDEX Jan 2013               36.50     -1.75  -4.58
RR.X12  ROUGH RICE Nov 2012                         15.31     -0.21  -1.35
VB      RUSSELL 2000 VALUE INDEX                  1063.13    -12.85  -1.19
ND.U12  NASDAQ 100 INDEX Sep 2012                 2753.75    -27.50  -0.99
GH      RUSSELL 2000 GROWTH INDEX                  466.63     -4.62  -0.98
RG      RUSSELL 1000 GROWTH INDEX MINI             654.53     -5.65  -0.86
DJ.U12  DJ INDUSTRIAL AVG Sep 2012                  12982      -102  -0.78
SP.H14  S&P 500 INDEX Mar 2014                     1358.0     -10.1  -0.74
KW.U12  HARD RED WINTER WHEAT Sep 2012             889.75     -6.25  -0.70
RV      RUSSELL 1000 VALUE INDEX MINI              687.20     -4.61  -0.67

———————————————————————

Free Video Seminar – “Spotting breakouts that lead to trend reversals”

http://broadcast.ino.com/redirect/?linkid=1952

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____________________________________________________________________________

E X T R E M E   S T O C K S
____________________________________________________________________________

Updated every 10 minutes around the clock.
More at http://quotes.ino.com/analysis/extremes/stocks/

WINNERS

FSR     FLAGSTONE REINSURANCE HOLDINGS               8.59      1.53  +21.67
BPT     BP PRUDHOE BAY                            89.5900   12.8200  +16.70
ZLC     ZALE                                       5.0200    0.6900  +15.94
SRPT    SAREPTA THERAPEUTICS                       14.415     1.815  +14.40
P       PANDORA MEDIA                              11.525     1.445  +14.34
RPRX    REPROS THERAPEUTICS                         12.64      1.25  +10.97
AH      ACCRETIVE HEALTH                            11.91      1.11  +10.28
VC      VISTEON                                     46.23      3.78  +8.90
GEF     GREIF                                       44.25      3.55  +8.72
APFC    AMERICAN PACIFIC                            11.75      0.94  +8.70

LOSERS

CIEN    CIENA                                       13.43     -3.29  -19.68
FSLR    FIRST SOLAR INC                             19.67     -4.53  -18.72
MDI     MAJOR DRILLING GROUP INTL                    9.29     -1.45  -13.50
FNSR    FINISAR                                     13.93     -1.48  -9.60
BRLI    BIO-REFERENCE LABS                          25.81     -2.70  -9.47
MCP     MOLYCORP                                    11.08     -1.15  -9.40
VRA     VERA BRADLEY                                21.53     -2.09  -8.85
COLDF   CARDNO LTD                                   7.45     -0.68  -8.36
TREE    TREE.COM                                  14.6400   -1.3200  -8.27
AMSWA   AMERICAN SOFTWARE                           8.290    -0.710  -7.89
_____________________________________________________________________

T H A N K   Y O U
_____________________________________________________________________

Why It’s Time to Buy The Cheapest Market in The World

by Carl Delfeld, Investment U Senior Analyst
Thursday, August 30, 2012
Carl Delfeld

To put it mildly, there is not much I like about Russia.

A couple of weeks ago, I highlighted to you Russia’s abysmal record on economic freedom. It ranks a pathetic #144 ranking in the 2012 Index of Economic Freedom.

Political freedom? What can you say about a government that puts a renegade band in jail for two years just because it doesn’t like their lyrics?

Still, I had to smile when I checked my Pacific Rim country portfolio this week and saw that the Market Vectors Russia ETF (NYSE: RSX) was the top recent performer – up around 18% since being added to the portfolio just a few months ago.

Given my antipathy towards the country, why on earth I did I add it in the first place?

It was, and remains, a dirt-cheap stock market.

According to the Financial Times, the Russian market is now trading at just 5.7 times earnings compared to 16.9 times for India, 15.1 times for the S&P 500 index, 19.4 times for the Philippines and 18.4 times for Mexico.

Is Siberia the Next Canada?

Why is it so cheap? Well in addition to the reasons I have already highlighted, Russia is one giant commodities play – an area out of favor with investors at the moment.

Roughly 70% of the Russian stock market is made up of resource stocks. The country is the world’s largest oil producer and the second largest oil exporter. On top of this, Russia is the world’s second largest natural gas producer and exports twice as much as its nearest competitor, Norway.

So when energy resource stocks are moving – so is the Russian market. Though, I have noticed that it always seems to trade at lower valuations than its peers. It’s also interesting to note that Russia has outperformed China over the last decade with a compounded return measured in US dollars of 325% versus China’s 247%.

Russia Finally Joining the WTO

There are also some developments that have recently made me watch Russia even more carefully…

First, just last week, after 19 years of painful negotiations, Russia finally joined the World Trade Organization (WTO). According to the World Bank, WTO membership will drive medium-term GDP up by 11% and could boost its growth rate by up to 3% per year. Under the terms, Russia must commit to a series of regulations that promise to energize domestic growth and encourage foreign investment.

In addition, it’s possible that up-to-now protected industries will get moving through a dose of badly needed international competition.

Second, Russia is steadily shifting its attention and resources to its Pacific Rim frontier. Anchored by the city of Vladivostok, Russia is stepping up its trade and investment outreach to countries such as China, South Korea and Japan.
(Source: Encyclopedia Brittanica)

In fact, over the past five years, bilateral trade with Japan has already doubled and trade with South Korea has tripled. This is just the beginning as the Pacific century unfolds.

In addition to ample supply of energy resources, Russia has geography in its corner. It takes only 2-4 days to get raw materials from Russia’s Asian frontier to China compared to weeks for many of its competitors.

Finally, despite the bad headlines, the Russian economy is chugging along pretty well with about a 4% growth rate. One of the largest food retailers and BMW sales are both growing at a 30% annual clip.

Pundits are always warning investors about “falling in love” with their stocks. I say be careful not to hate them too much – you will miss opportunities.

Good Investing,

Carl