International markets also moved higher over the past week as of Thursday’s close. Japan’s Nikkei 225 rose 1.79%; Germany’s DAX 30 rose 1.91%; and Britain’s FTSE 100 rose 1.3%. German stocks rebounded as Ukrainian concerns subsided, although French manufacturing declined and job creation remains a key concern. In Asia, investors grew concerned over soft readings of manufacturing activity in both China and Japan during August. (For more, see: ChartAdvisor for Aug. 15.)
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International markets moved largely higher over the past week, as of Thursday’s close. Japan’s Nikkei 225 jumped 1.07%; Britain’s FTSE 100 jumped 0.85%; and, Germany’s DAX 30 jumped 0.91%. In Europe, investors grew concerned over a slowdown in Germany’s economy, as Germany has generally served as an anchor for the region. In Asia, China’s economy grew at a 7.5% annualized rate–a positive sign.
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Commentary
International markets followed the U.S. with lower yields over the past week. After Thursday’s U.S markets closed, Japan’s Nikkei 225 fell 1.6%; Britain’s FTSE 100 fell 2.82% and Germany’s DAX 30 fell 3.5%. In Europe, Germany expressed concerns over its second quarter performance given the crisis in Ukraine, while banking institutions in the region remain on unstable ground. In Asia, China’s growth rates picked up with GDP growth rates of 7.4% projected for 2014 and 7.6% projected in 2015.
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Three Traps to Avoid in This Market By: David Bartosiak July 05, 2014 |
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Like the old Atari game “Pitfall”, this market is full of traps that investors can easily fall into. With the S&P 500 and Dow Jones Industrial Average at all-time highs, the sleepy crawl upwards can lure investors into traps. In this article I’ve identified three ways that the market can trick you into losing money.
1) Blindly Buying Dips
It may sound easy enough to jump in and buy a stock on a pullback in this market. After all, the practice has worked very well during the stock market’s run we’ve seen off the lows of March 2009. However, as we reach higher highs, the market is likely to become more discriminatory. That is, sector selection and individual stock selection will become increasingly important.
Buying a stock just because it pulled back could prove to be quite dangerous. When buying on a pullback, it’s important to make sure there has not been a change in its long-term trend. The pullback could mark the end of a trend and not just a retreat to a support level, especially in the short-term. Always remember: “The trend is your friend, until it ends.”
2) Chasing Winners
While buying that hot cloud-based technology stock or electric car company may sound like a great idea, it’s also a great way to lose money. We’ve all heard the old adage: “Past performance is no guarantee of future results” and it couldn’t be truer when it comes to individual stocks.
The stock market is always looking forward to the next quarter’s and next year’s results. Earnings stories that were great in Q1 could quickly reverse as Q2 results and guidance are announced. Make sure you investigate these earnings pictures and outlooks before you jump onto last quarter’s winners. Luckily for you, the Zacks Rank system is here to help you identify which of these stocks are in the best positions to continue higher.
3) Taking Profits Too Soon
While nobody wants to let a winner turn into a loser, it’s equally as important not to cut off your nose just to spite your face. Let your winners run and cut your losses short. By selling a stock just because it’s made a large run, you could be leaving a tremendous amount of money on the table.
Treat each day that you own a stock like it’s the first day you bought it. Always have a stop-loss where you will take your risk off the table. You can move this stop-loss up as the stock moves up. This way you maximize your potential gain along the uptrend of a stock. Nobody wants to be the guy that sold Google at $250 just because they thought it went up too fast.
Easy Trap Avoidance
These are three of the biggest mistakes an investor can make in this market we have today. Perpetually higher highs can give investors a false sense of security that Mr. Market can easily snatch away at the drop of a dime.
Good Investing,
David
David Bartosiak is Zacks’ resident technical and momentum expert. He selects stocks and delivers daily commentary for our newly launched Momentum Trader.
International markets were somewhat mixed over the past week. Britain’s FTSE 100 jumped 0.25%; Japan’s Nikkei 225 fell 2.03%; and Germany’s DAX 30 rose 0.54% over the past week, as of Thursday’s close. In Europe, investors remain concerned over developments in Ukraine, but the European Commission expects 1.6% growth in 2014. In Asia, China’s growth remains a key concern for investors with many experts predicting performance similar to last year’s lackluster turnout.
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Momentum stocks stabilized on Wednesday while the Dow Jones Industrial Average stalled.
In recent weeks, the primary stock market trend was significant weakness in risky sectors like social media and biotech, while lower-beta groups like utilities marched up steadily.
However, today we started seeing signs that the ugly selling in momentum stocks may be coming to an end.
The closely watched iShares NASDAQ Biotechnology Index ETF (IBB) finished in the red and utilities rose again, but the Global X Social Media ETF (SOCL) rose an impressive 2.4%.
Additionally, hot tech names like FireEye (FEYE), Splunk (SPLK), and Netflix (NFLX) were all solidly in the green following huge declines in March and early April.
We also saw significant outperformance in the Russell 2000 and Nasdaq Composite, which both rose 0.8%.
By comparison, the Dow was up just 0.1%.
Emerging markets, which have been red hot as of late, were generally green, but the iShares MSCI Brazil Index ETF (EWZ) fell. That ETF had risen 25% in a virtual straight line since March 14, so it was due for some profit-taking.
In currencies, the USD/JPY fell sharply after Bank of Japan Governor Haruhiko Kuroda announced that the bank was not considering additional monetary easing, as Japan is on track to meet its 2% inflation goal.
And after the close, aluminum giant Alcoa (AA) reported first-quarter earnings that beat Wall Street’s expectations.
On the domestic data front, we’ll see MBA Mortgage Applications, Wholesale Inventories, and, most importantly, the FOMC minutes from last month’s meeting.
Overseas, Australian Consumer Confidence and the German and British Trade Balances will be reported.
In earnings, Constellation Brands (STZ) and Bed, Bath & Beyond (BBBY), will report, but neither is likely to be market-moving.
Commentary
International markets fared worse than U.S. markets this week. Japan’s Nikkei 225 fell 3.1%; Britain’s FTSE 100 fell 2.3%; and, Germany’s DAX 30 fell 1.16%. In Asia, investors remained concerned with capital outflows despite rising interest rates. In Europe, falling inflation suggested that the region’s economy may not be quite as strong as the market had hoped.
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| Market Review for Week Ending December 29, 2013 | |||||||||||||||||||||||||||||||||||
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Major U.S. indices moved higher this week, as higher new home sales, lower jobless claims and positive signs of consumer spending offset slower growth in personal incomes and lower than expected consumer sentiment. Large-cap stocks in the Dow Jones Industrial Average led U.S. equities higher, while small-cap stocks in the Russell 2000 lagged the market. Looking forward, investors will be closely watching the Federal Reserve for signs of policy changes.
International markets moved higher this week due to strength in the U.S. and other developed markets. Japan’s Nikkei 225 jumped 1.94%; Britain’s FTSE 100 jumped 2.18%; and Germany’s DAX 30 jumped 2.01% this week. In the eurozone, economic activity picked up in December although the ECB warned that growth remains fragile. In Asia, Japan’s economy continues to be the big story as Prime Minister Shinzo Abe’s reforms continue to plow forward.
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Equity markets rallied on some positive economic data and ongoing activity from central banks.
The S&P 500 broke the 1,700 mark for the first time to hit a new all-time high. We also saw record levels in the Dow Jones Industrial Average) and Russell 2000 indices today.
China’s PMI topped estimates, while stateside, the ISM manufacturing index came in at 55.4 vs. the 53.1 consensus. On the negative side, US construction spending fell short of the 0.4% expected by economists, coming in at -0.6%.
Initial jobless claims were much better than expected at 326K, 19K below consensus.
And on the central bank front, the ECB kept its target rate at 0.5% and said it expects rates to stay low, or go even lower, for the foreseeable future.
Yelp Inc (YELP) jumped 25% after reporting better-than-expected earnings and receiving three analyst upgrades.
The Energy Select Sector SPDR ETF (XLE) outperformed on the day, pushing 1.6% higher as crude oil prices spiked.
The ProShares UltraShort 20 Year Treasury ETF (TBT) pushed 4% higher on the day as US Treasury prices reversed yesterday’s gains.
The unemployment report will be released at 8:30 a.m. EDT. Nonfarm payrolls are expected to come in at 175K, while the unemployment rate is expected to fall from 7.6% to 7.5%. Personal income and outlays will also be released at 8:30 a.m. Both are expected to increase by 0.4%. Factory orders will be reported at 10:00 a.m.
| The Weekly Report For May 20th- May 24th | |||||||||||||||||||||||||||
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| The major U.S. indices moved lower this week, ahead of the long Memorial Day weekend. After reaching all-time highs last week, many traders attributed the sell-off to a combination of profit taking, U.S. Federal Reserve jitters and turbulence in foreign markets. However, the underlying economic data released this week remained strong, with April durable goods increasing a higher-than-expected 3.3% amid rising demand for aircraft and automobiles.
International indices moved largely lower during the week, too. The big surprise was Japan’s Nikkei 225, which experienced a breathtaking 7.3% single-day drop on Thursday. Other indices around the world followed the lead, with Britain’s FTSE 100 down 1%, Germany’s DAX down 1.1% and Australia’s ASX 200 down 3.8%. However, the eurozone saw some favorable economic data, including positive German sentiment and business confidence data.
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