5 reasons the market is seeing red
5 reasons the market is seeing red

Geopolitical crises are taking a toll on stocks as we head into the seasonally weak month of August.

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US investors are wading back into equities and ETFs, even as the markets continue to sell off.

By TheStreet Staff Aug 18, 2011 3:12PM

TheStreet

By Robert Holmes, TheStreet

 

The S&P 500 ($INX) appears to be firmly in the jaws of bears, but data actually show that U.S. investors are slowly turning bullish on equities again.

 

Mutual fund data from research firm TrimTabs suggests that retail investors are bottom-fishing, dipping a toe into the pool of U.S. stocks. The data come as the major stock indices are plunging anew, with the S&P 500 down 4.5% Thursday and the Dow Jones Industrial Average ($INDU) also down close to 4% shortly before 3 p.m. ET.

 

TrimTabs says that preliminary figures show that U.S. equity mutual funds saw inflows of $6 billion on Aug. 15 and Aug. 16 after redeeming $41.8 billion in the previous 12 sessions.

 

The city has ended its rating contract withs S&P after the agency downgraded its investment portfolio.

By Kim Peterson Aug 18, 2011 2:49PM
Don't like what Standard & Poor's has to say about you? Fire 'em.

That's what the city of Los Angeles did after S&P downgraded its $7 billion investment portfolio to AA from the perfect AAA rating. The city will no longer hire S&P to rate its investments, The Los Angeles Times reported.

"We have really lost faith in S&P's judgment," the city's interim treasurer said.

After cutting its rating on the U.S. debt this month, S&P went on a downgrade binge that included dozens of cities, counties and other municipalities. And some of those governments are joining Los Angeles in their dismissal of the agency. 

US presidents have very little control over global oil prices. Could the candidate change that?

By Kim Peterson Aug 18, 2011 2:21PM
Candidates make a lot of promises on the campaign trail, but super-cheap gas isn't normally one of them. It's pretty much impossible for one lawmaker to accomplish that.

But Michele Bachmann is going to try.

"The day that the president became president, gasoline was $1.79 a gallon. Look at what it is today," she said in South Carolina. "Under President Bachmann, you will see gasoline come down below $2 a gallon again. That will happen." 

Anchors Jim Cramer and Simon Hobbs tussle about whether we could be in a 'Lehman moment.'

By Kim Peterson Aug 18, 2011 1:39PM
Worries about European banks triggered a blistering argument Thursday morning between CNBC anchors Jim Cramer and Simon Hobbs.

Tensions between the two have been growing lately, and everything exploded after Cramer suggested the possibility that this could be a Lehman moment. Check out the following video. 

Extreme bullish sentiment and technical indicators signal a pullback in gold and its popular ETF could lie ahead, and a covered-call strategy may be the best way to profit.

By MoneyShow.com Aug 18, 2011 12:23PM
By Tom Aspray, MoneyShow.com

The more-than-20% gain in the SPDR Gold Trust (GLD) since the July 1 close has been relentless, and domestic and global news has provided daily reinforcement that gold is the only “safe” investment.

As gold has powered to several new highs over the past two weeks, the only thing missing has been analysts who are voicing even a short-term bearish outlook for the yellow metal. In fact, it has almost become un-American to question whether gold will ever stop going higher.

It is important to separate the short-term from the long-term trend analysis. The monthly on-balance volume (OBV) analysis of both GLD and the Comex gold futures is still pointing higher, as it has been for the past seven years. The same is also true for the weekly analysis, so one might ask, “What’s the problem?”

The Starc band analysis can be used to identify high- and low-risk areas to buy or sell based on daily, weekly, or even monthly time frames. When a market reaches a historically high-risk buying area using both the weekly and the monthly analysis, the odds of some consolidation or a more significant pullback are very high. 

From a money-management point of view, this can allow even long-term investors to protect profits by hedging their positions.
 

After a brief respite, stocks are plunging again. We're retesting the lows, but the bottom hasn't fallen out.

By Anthony Mirhaydari Aug 18, 2011 12:19PM

Stocks were plunging Thursday in reaction to some very poor economic data. The Philadelphia Fed Business Outlook Survey dropped to its worst levels since early 2009 as results badly missed Wall Street estimates. The General Business Conditions component dropped to negative 30.7 vs. the positive 1 analysts were expecting. Ugliness was seen in new orders, shipments and employment.


If there was any silver lining, it was that the Philly Fed and Wednesday's Empire State Index don't yet suggest the all-important economy-wide ISM Manufacturing Index has dropped into recessionary territory. Moreover, the Philly Fed survey was conducted between Aug. 8 and 16, so it was no doubt affected by the recent financial market volatility.

 

If markets rebound -- as I expect heading into next week's speech by Federal Reserve Chairman Ben Bernanke in Jackson Hole, Wyo., where new market-supporting initiatives will likely be unveiled -- business confidence should be restored quickly. Remember that while a new recession is still a distinct possibility, we don't have the normal preconditions. Profitability is still growing, interest rates are near zero, jobs are being created, inflation is low, and the Fed is being extremely accommodative.

 

In roller-coaster market conditions, yields offer investors a seat belt.

By TheStreet Staff Aug 18, 2011 10:43AM

TheStreet

Image: Arrow Down (© Image Source/SuperStock)Frank Byrt, TheStreet

 

The roller-coaster stock market has investors running for shelter in the form of top-rated companies that pay high dividends, or mutual funds that invest in them.

 

All U.S. equity mutual fund categories have seen large outflows this year, except for so-called equity-income funds, which took in $11 billion through Aug. 10, Standard & Poor's said. Investors are piling into the safest stocks as the U.S. economy is slowing. Thursday, Morgan Stanley (MS) lowered its forecast for global economic growth.

 

The firm's MarketScope Advisor unit recently highlighted its three top-rated five-star equity-income funds that are benefiting from those flows and suggests that "investors should follow suit" in their investment choices.

 

This spectacular blowup will create bargains in tech stocks, but wait until the dust has settled.

By Jim Cramer Aug 18, 2011 9:00AM

jim cramerthe streetNetApp (NTAP) is a real blowup, and it puts the blowup right at the feet of Washington, D.C. The problem is that even without Washington, it was probably the wrong time to own it, because tech is so, so problematic right now.

 

You have a triple whammy against the sector now. Europe, where so much tech is sold, is going off the grid because of the debt crisis.

 

The U.S. is a mess -- although not going into a recession -- and government spending, which has been a big part of tech sales, is being cut, in some cases dramatically.

 

Finally, we have studied tech for many years, and it has rarely paid to own tech stocks before the last week of September. We are in the technology dog days, when owning the stuff is totally precarious, as those who have NetApp stock know all too well.

 

Investors are already reacting, and their reactions will have big effects.

By Motley Fool Pick of the Day Aug 17, 2011 5:12PM

By Dan Caplinger

 

Few weeks on Wall Street can match the craziness that last week gave investors. Four days of huge volatility, followed by what seemed like a quiet Friday by comparison with a 125-point jump for the Dow, has everyone on edge.

 

What's next?
In the aftermath, everyone's looking for answers about what's to come. Poring through all the things that investors did during last week's roller-coaster ride yields many different insights:

  • On the commodities front, hedge funds poured into gold and precious metals, but interest in other commodities like base metals and foodstuffs largely evaporated. In particular, copper saw speculative demand drop by more than 60% for the week, potentially boding ill for big copper producers Freeport-McMoRan (FCX) and Southern Copper (SCCO).
 

Statoil is on a roll, announcing its third high-impact discovery this year.

By Jim J. Jubak Aug 17, 2011 4:45PM
Jim JubakFor Statoil (STO), one plus one equaled way more than two Tuesday.

The company has announced that its Aldous and Avaldsnes oil finds are probably part of a single combined oil structure that contains 500 million to 1.2 billion barrels of recoverable oil.

On Aug. 8, Statoil reported that a well drilling at the Aldous Major South prospect had established a common oil and water contact between the Aldous and Avaldsnes oil structures.

This is the Statoil’s third high-impact discovery this year. (A high-impact discovery is one that holds more than 250 million barrels of oil equivalent.)

Shares of Statoil weren’t up much in Oslo on the discovery, but they climbed 3.8% Wednesday.
 
Tags: oil

Sitting out the madness or rebalancing portfolios? MSN Money readers share their strategies.

By Kim Peterson Aug 17, 2011 4:04PM
Image: Investment building blocks (© Comstock Images/Jupiterimages)OK, the lot of you professional traders can hush up for a moment. Let's hear from the investor next door about how to handle this market.

Many of MSN Money's readers have recently shared what they're doing in this topsy-turvy market, and I bet their advice is just as good as any that you'd find from a professional.

On MSN Money's Facebook page, Chris S. says he has been timing major market cycles since 1980. He thinks you can time the market -- but you just can't time it on a short-term basis. "You have to educate yourself and study, and most small investors do not do that," he writes. 

Worries about Pentagon cuts have hit defense stocks hard, but sentiment now appears to be turning.

By MoneyShow.com Aug 17, 2011 3:42PM
By Igor Greenwald, MoneyShow.com

The country’s at war, the economy’s weak, and US weapons are in demand all over the world. You’d think these would be banner days for defense stocks.

Instead, they’ve been shredded like cannon fodder. The equal-weighted NYSEArca Defense Index, which represents the major Pentagon contractors, is down 17% in six weeks.

That’s still nearly triple its value at inception -- 10 days after 9/11 -- which shows what a good decade it’s been for the arms merchants. But all offensives must come to an end, and after some 35 years of purchasing guns and butter on ever-expanding credit, a thriftier nation is considering downsizing to bayonets and margarine, as it were.
 

The current crisis in Europe is a continuation of the financial meltdown that struck the US in 2008, says the billionaire investor, and the future of the euro depends on Germany.

By TheStreet Staff Aug 17, 2011 1:47PM

TheStreet

By Dan Freed, TheStreet

 

The current crisis in Europe is a continuation of the 2008 U.S. crisis rather than a separate event and it is far from over, according to billionaire investor George Soros.

 

Soros made the comments in a interview with German publication Der Spiegel, where he weighed in provocatively on several topics.

 

Asked to compare the 2008 crisis in the U.S. subprime market with the current European crisis, Soros said, "This crisis is still the continuation of the same crisis."

 

The retailer wants 'Jersey Shore' star Michael Sorrentino to stop wearing its clothes. Is this just an ill-conceived publicity stunt?

By Kim Peterson Aug 17, 2011 12:46PM
Normally, companies love it when celebrities wear their clothes or drink their Frappucinos in public.

Not Abercrombie & Fitch (ANF). The apparel retailer is not happy that its clothing is favored by Michael "The Situation" Sorrentino, one of the stars of the reality show "Jersey Shore." And Abercrombie allegedly wants Sorrentino out of its clothes so badly that it's willing to pay him for it.

The company said that it offered Sorrentino a "substantial payment" to wear something else and that it's "urgently awaiting a response." Company shares are down more than 8% Wednesday, by the way.

So what's so wrong, exactly, with The Situation wearing Abercrombie? The company says "this association is contrary to the aspirational nature of our brand" and "may be distressing to many of our fans." 

Chart patterns show the recent price decline is just a correction within a long-term uptrend.

By MoneyShow.com Aug 17, 2011 11:30AM
By Tom Aspray, MoneyShow.com

Copper prices peaked in February as concerns over the growth rate in China, and therefore, the overall demand for copper, was a reason to sell. The Chinese cut back copper imports severely in the spring and prices have continued lower. Copper prices were hit hard last week when concerns over a new recession in the US added additional pressure on prices.

Though copper rebounded sharply from last week’s lows, Germany’s disappointing GDP numbers have increased concerns over the nation’s economy and dampened bullishness.

Chinese imports started to increase in June and recent reports from the London Metals Exchange indicate that Chinese buying has caused the copper inventories to decline in Asian warehouses.

So what’s ahead for copper prices? Technically, the decline from the highs early in the year just looks like a normal correction. Last week’s drop may have marked a panic low in copper prices and copper-mining stocks like Freeport-McMoRan Copper & Gold (FCX).

Let’s look at why another drop in copper prices could provide a good buying opportunity.
 

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[BRIEFING.COM] The stock market punctuated July with a broad-based retreat that sent the S&P 500 lower by 2.0% with all ten sectors ending in the red. The benchmark index posted a monthly decline of 1.5%, while the Russell 2000 (-2.3%) underperformed to end the month lower by 6.1%.

To get a better feel for what led to today's retreat, we'd like to look back to Wednesday, when the market had ample reason to rally, but did not. Instead, it ended basically flat after a sloppy day of ... More


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