Stocks have rallied 177%, and while calling a top is the easiest thing to do, it might not be the most accurate, Cramer says.
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Declining prices and a still-gloomy market outlook haven't stopped several of the sector's top stocks from rallying.
By Tom Aspray, MoneyShow.com
Tuesday’s release of the March S&P/Case-Shiller price index showed a drop of 3.6%, which was the largest year-to-year decline since November 2009. The decline in national home prices back to 2002 levels has many people discussing a double-dip recession in housing. Sentiment on housing has also gotten worse, as 54% of Americans do not think housing will bottom until 2014.
The gloomy outlook has not affected homebuilders' stocks, however, as many have surged over the past few days on strong volume. The Dow Jones Homebuilding Index completed a weekly head-and-shoulders (H&S) top formation in April 2006 when the neckline in the 800 area was broken.
This industry group eventually made a low at 162 in November 2008. Since those lows, the group has traded in a wide range, but it now appears that the correction from the early 2011 highs is over.
Some of the largest homebuilders are already near resistance, while others are much closer to good support and may provide low-risk buying opportunities.
Here are your choices for saving intelligently.
By Alex Dumortier, CFA
This month, the rate of inflation exceeded the yield on the 10-year Treasury bond for the first time since 2008. That's a negative real yield. Your assets will lose purchasing power with that return. Bill Gross, who manages the world's biggest bond fund, told Bloomberg Television last week: "Savers are being disadvantaged. . . . We call (what policymakers are trying to do) pocket picking." Don't let central bankers pick your pocket. Here are a few asset allocation guidelines to avoid just that.
Saving is healthy -- even necessary. Indeed, during the housing bubble, there was spending on a massive scale, with people borrowing against the value of their home to fund their spending habits. Now that the party is over, U.S. consumers are left licking their wounds -- or balance sheets, as it were.
Avoid cash and government bonds
However, by setting interest rates at zero, the Federal Reserve isn't making it easy for people to save -- that's the idea.
Catastrophic claims are pummeling profits, though shares of some insurers still carry 'buy' ratings.
By Frank Byrt, TheStreet
There's no shelter for those in the property-casualty insurance industry this year, as they face a tidal wave of underwriting losses stemming from a string of catastrophes of Biblical proportions, including earthquakes, Tsunamis, nuclear plant meltdowns, and tornados.
SNL Financial, which tracks insurance industry data, reported that the industry had its worst first quarter since 2001, with an estimated underwriting loss of $3.3 billion, as insurers spent nearly $1.03 on claims and expenses for every dollar they collected in premiums.
And disaster-claims payouts worldwide this year are on record pace, on order of $50 billion to $60 billion so far, said Jose Miranda, director of client advocacy at Eqecat, which provides disaster and risk modeling for insurance companies.
So you'd think insurance-industry analysts would have a bunch of screaming "sell" ratings on companies in this sector, particularly on reinsurers, who take on risk that the front line property/casualty insurers don't want.
These funds track travel, food, entertainment and social networking.
By Don Dion, TheStreet
The temperature is rising up here in the Berkshires, and for many people here and across the U.S., this means it's time to escape the day-to-day office life and enjoy some rest and relaxation.
While many folks are counting down to the time when they can replace their desk chairs with beach chairs, for others, the arrival of summer presents a number of attractive investing opportunities.
There are a number of exchange-traded funds that may prove exciting to watch over the next few months.
No longer hostage to raw costs and consumer whims, consolidated clothing companies like Phillips-Van Heusen are premier growth vehicles.
The results were spectacular, led by international -- chiefly Calvin Klein and Tommy Hilfiger. Of course, going into the quarter the betting was heavy that we would have another disappointment, like Polo Ralph Lauren (RL) after its quarter, or like VF Corp. (VFC) after a recent conference.
But the bearish reasoning was all backward. We heard that PVH would have a hard time with cotton costs for Calvin Klein. But PVH licenses the Calvin Klein name and doesn't have to eat those cotton costs. We heard that Tommy can't maintain its strength in Europe. But prices are actually rising for Tommy clothes (they already sell for more than double their cost here for pretty much the same product) in Europe and Russia.
The Brazilian government is trying to attract customers to Vale. What does that involvement mean for the company?
It spends more than it brings in, and it's on track to hit its debt limit. Why can't it pull itself out of this mess?
How is it that UPS (UPS) and FedEx (FDX) can run profitable, successful delivery services while the U.S. Postal Service blunders its way into insolvency? That's an easy question to answer after you read the BusinessWeek article.
The USPS brought in $67 billion in revenue last year, not nearly enough to cover its costs. It's nearly $15 billion in debt and will hit its debt limit this year. If this continues, the Postal Service will collapse.
Post continues after this video interview with BusinessWeek's editor about the article:
The stocks have soared over the past year, and they stand to benefit from low interest rates and more conservative investors.
There is no stopping this sector. The top stock in the group? Analysts from UBS say menthol leader Lorillard is the top pick, and they're raising their price target on the stock to $124. Lorillard is trading at about $115 today.
Lorillard has a strong growth trajectory, and is expanding its Newport line to include non-menthol cigarettes such as its recently introduced Newport Red. In the first quarter of this year, Lorillard's sales rose nearly 13%, profit rose 7% and the company raised its dividend 16%.
The chief executive, currently on medical leave, is on board to announce the company's new software offerings. With video.
Normally the company keeps its set list top secret. But on Tuesday, Apple was very clear that the event is all about software, including its new operating system, Lion. Apple will also talk about its next mobile operating system for devices like the iPad and iPhone, and finally its upcoming cloud services product, called iCloud.
And to top it all off, chief executive Steve Jobs will deliver the keynote. That wasn't expected, as Jobs went on medical leave in January. One large Apple shareholder talks about what he sees in the news in the following video.
Post continues after video:
Traders playing the short side must be sure to avoid some common pitfalls. See what they are and discover several heavily shorted stocks that seem poised to move higher.
With low multiples and good products, the stock is compelling.
Dell (DELL) lost its No. 1 place in PC market share to Hewlett-Packard (HPQ)in 2006 and has been unsuccessfully struggling to regain its former glory ever since. Now, after years of looking like a turnaround that wouldn't ever turn, the company's recent earnings report suggests that Dell could be in the early stages of a turnaround. The company's new XPS 15z notebook, announced on May 24, provides more evidence that Dell's stock could be poised to take off.
This time it looks as though Dell got it right. CNET describes the XPS 15z as "much more in line with what people have come to expect from Dell nowadays: some thoughtful style, decent quality, but still very accessible to mainstream consumers."
Will funds in defensive sectors continue to perform well?
By Don Dion, TheStreet
Here are five ETFs to watch this week.
Europe took center stage last week as investors were once again reminded of the debt crises facing vulnerable euro members. During this week, it will be interesting to see if these issues remain on the forefront of investors' minds.
I continue to urge investors to avoid products with heavy exposure to nations like Spain, Italy, Greece and Ireland. Rather, risk-tolerant investors seeking exposure to this corner of the developed world may find nations outside of the euro bloc attractive. Over the most recent 30-day period, funds like the iShares MSCI Sweden Index Fund (EWD) and iShares MSCI Switzerland Index Fund (EWL) have managed to outpace EZU.
Netflix and Dean Foods are among the US benchmark's top gainers this year.
By Jake Lynch, TheStreet
That leaves the benchmark with a 2011 gain of 5.5%, which is on pace to trail the performance of the previous two calendar years.
Amid the correction, leadership has shifted to defensive sectors like health care, consumer staples and utility stocks, which were previously bull-market laggards. In the past four weeks, S&P telecommunications stocks have delivered a median return of 6.4% and health-care shares gained 4.2%.
The list of concerns facing investors is piling up. Europe's debt woes, driven by Greece, threaten to stall economic growth in a region that's as large as the U.S. Japan just sank into a recession because of an environmental catastrophe, and China, the engine of global growth, is slowing amid higher interest rates.
Medical marijuana is already massively profitable for a handful of states, so it's no surprise pharmaceutical giants want in on the action.
Though it may not be politically correct to talk about the benefits of legalizing marijuana, the bottom line is that many folks are believers in the power of pot as a medication. And those believers include Big Pharma executives looking to boost their bottom lines.
Consider that medical marijuana sales in the U.S. already will reach $1.7 billion this year, with nearly $250 million coming from Colorado, according to a report released in March. Further, the report predicts that medical marijuana sales will reach $8.9 billion if 20 more states allow its sale for medical use.
If the U.S. government ever legalizes marijuana, sales would probably make the $11 billion Pfizer (PFE) raked in on Lipitor worldwide last year look like chump change.
It's time for investors to transition their portfolios for the proverbial summer rally.
With May selling behind us it is time to drift over to the long side of the market. Selling in May and going away played out well for those short the market or with portfolios properly hedged.
Now that summer is coming, investors can position for the proverbial summer rally. The economy may be showing signs of weakness, but corporate earnings are still strong. It is those profits or the promise thereof that will lift stocks.
June is somewhat of a quiet month as the second quarter winds down. I expect investors to nibble at stocks here in anticipation of good profit numbers to be released in July. I would buy the rumor.
The ETF to buy this week is the iShares S&P North America Technology and Multimedia Fund (IGN).
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The solid report comes a month after the retailer closed all of its Canadian operations.
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[BRIEFING.COM] The stock market finished an upbeat week on a mixed note. The S&P 500 added just over a point, holding its weekly gain at 1.0% while the Nasdaq lost 0.4%.
The major averages began the day on an upbeat note, but relinquished their opening gains during the first 90 minutes of action. The early sentiment was boosted by a better-than-expected nonfarm payrolls report for February (175K versus Briefing.com consensus 163K), but a closer look into the report suggested that ... More
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