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.


If the broad market finds a near-term bottom, semiconductors should also rebound.

By MoneyShow.com Aug 24, 2011 10:43AM

By Tom Aspray, MoneyShow.com

The strong action in the US stock market on Tuesday came as a surprise, as there was little bullish news that the financial press could use to explain the price action. The prevailing opinion seems to be that the further signs of a weakening economy will spur Fed Chairman Ben Bernanke to say something dramatic on Friday.

Of course, from a technical perspective, any news is a distraction because if it is significant, the market usually reflects it well in advance. There has been some short-term technical improvement with Tuesday’s close, and it suggests that we should see at least a test of last week’s highs, if not a rally to stronger resistance over the near term. To support this view, the major averages will need to surpass Tuesday’s highs either Wednesday or Thursday.

The semiconductor sector has been especially weak since the May highs, and the combined analysis of a leveraged long and short semiconductor ETF suggests a potential contra-trend trading opportunity.


Premium lagers are taking the UK by storm as fans flock to their flavor and originality.

By Kim Peterson Aug 23, 2011 4:52PM
The fastest-growing beer trend in the United Kingdom is American craft brews.

That's according to the Guardian, which found research data showing that sales of premium lagers imported from the U.S. have soared by 150% over the past year.

British pub-goers are gaga over Blue Moon and Sierra Nevada Pale Ale. UK grocer Tesco (TSCDY), sensing a trend in the making, is launching those two beers along with Goose Island and Brooklyn at 750 stores, the Guardian reports. 

Agriculture commodities are on the move, breaking out of consolidation for the first time since last summer.

By Anthony Mirhaydari Aug 23, 2011 3:16PM

It's been a tough summer for stocks and other risky assets -- but the same can't be said for agricultural commodities. Hot, dry drought conditions have ruined crops all across the American growing regions. At the same time, demand remains robust thanks to the big appetites of newly empowered eaters in the developing world.


The USDA cut its forecast of how much of the standing corn crop is in good or excellent shape to just 57%, down from 60% last week and 70% a year ago. Already, with carryover stocks low from last year, a poor harvest will do further damage to meager inventories. At the same time, China has recently become a net importer of corn and last year made its largest purchase of U.S. corn in ten years. Of course, demand from ethanol production continues as well.


The combination of tighter supply and stronger demand is sending prices higher once more. As a result, as a group agricultural goods are pushing up and out of a long seven-month downtrend dating back to February. A powerful new uptrend is being established. Here's how to take advantage.


The company now counts on emerging markets for most of its sales. This isn't the Tupperware of old.

By Kim Peterson Aug 23, 2011 1:48PM
When times get tough, the tough turn to Tupperware (TUP).

The stock is on a roll, up nearly 4% Tuesday to $62.20. Shares have soared 50% in the past year. Investors are confident that Tupperware has evolved from the jello-mold days of old into a company that now has a worldwide presence.

Tupperware has a direct sales force of 2.6 million around the world, the company tells The Associated Press. The old-fashioned Tupperware party is still around -- but now one takes place every 1.7 seconds, compared with every 2.3 seconds a few years ago. 

These blue chips show strength and stability in any economic environment.

By MoneyShow.com Aug 23, 2011 11:53AM

By Tom Aspray, MoneyShow.com

The downgrade of the United States’ AAA debt rating came as a shock to many and gave investors another reason to sell stocks over the past few weeks. As noted in the The New York Times several weeks ago, the universe of companies whose long-term debt receives the top rating has been shrinking for years.

Thirty years ago, over 60 companies had AAA ratings, but that number had dropped to 15 by the year 2000. Some companies dropped off the list when they were acquired by other companies, while the financial crisis knocked Pfizer (PFE), Berkshire Hathaway (BRK-B), and General Electric (GE) off the list.

The graphic below from The New York Times shows the long-term debt ratings of S&P 500 companies and shows that there are now just four U.S. companies that still have the top rating. Only three companies have AA+ ratings, while the largest concentration of companies are in the BBB class.


Hint: Don't leave yourself vulnerable to an eventual market turnaround.

By TheStreet Staff Aug 23, 2011 11:50AM

Image: Gold Bars (© Photodisc/SuperStock)By Don Dion, TheStreetTheStreet


Gold has been thrust into the spotlight during recent weeks of economic turmoil. With prices topping $1,900 per ounce, no wonder investors are clamoring for exposure.


Gold is not the only precious metal that has benefited from market uncertainty. Investors have also been turning to silver for safety. As a result, silver-backed ETFs have powered higher. The popular and closely watched iShares Silver Trust (SLV) recently enjoyed seven consecutive days of upward action.


Given the excitement surrounding gold and silver, it may be tempting to increase exposure to any and all precious metals. That, however, is likely not the most ideal investing strategy for people looking to maintain a stable, long-term allocation.


With staples like soda, chocolate and toothpaste seeing new strength in emerging markets, these funds have shown remarkable resilience this year.

By TheStreet Staff Aug 23, 2011 11:36AM

Image: Chocolate (© image100/Corbis)By Stan Luxenberg, TheStreet


Through all the market turmoil of recent months, some consumer funds have stayed in the black. While the S&P 500 ($INX) has lost 9.5% this year, Vanguard Consumer Staples (VCSAX) has returned 2.4%, while Rydex Consumer Products (RYCIX) has gained 4.1%, according to Morningstar.


The resilience of consumer funds is not surprising. Consumer stocks include companies that sell things customers buy constantly, such as food, beverages tobacco, and beauty products. The group includes rock-solid blue chips such as Coca-Cola (KO), Procter & Gamble (PG) and Kraft Foods (KFT). Such stocks generate stable cash flows year after year.


Consumer stocks may seem unexciting in bull markets, but they can shine in downturns. This year many consumer stocks have done particularly well because companies are recording strong sales gains in emerging markets.


Global currencies are losing value, miners aren't finding much new gold, and the Fed has no good news.

By Jim Cramer Aug 23, 2011 9:07AM

jim cramerthe streetThe race to debase. That's what's fueling gold right now. The desire of almost all countries in the world -- from Japan to Switzerland, from all of Europe to the U.S. -- to get their currencies down in order to export their way out of the worldwide economic slowdown.


When everyone believes in a weak currency, you need a strong currency, and the strongest currency is gold.


I have liked gold for years and years, mostly as a hedge to the chaos and a belief that it is way too hated as an asset class. I base that view on the notion that gold represents about 1.55% of the world’s portfolios, down from about 5% historically.


That's only one reason to buy, though. We have also seen emerging middle classes around the world purchase gold as a way of passing on wealth or showing wealth, as is the case in the upcoming Indian wedding season. We see wealthier central banks buying gold in order to keep a store of assets that can't be debased by governments.


The company cut its plant budget at its London heaquarters, roiling a workforce already hit by hard times.

By Kim Peterson Aug 22, 2011 6:55PM
The London office of Goldman Sachs (GS) is in an uproar. Disgruntled employees have divided themselves into rival factions, leading to a recent standoff between the two sides.

Over plants.

Yes, the friendly office plant. The kind that studies show boosts morale, especially in hard times. And times are tough for Goldman. The chief executive just hired his own defense attorney. The company is not-so-affectionately called the great vampire squid. Its role in the 2008 financial crisis is still being investigated. 

Investors are too hopeful about finding bargain deals. That's not a good sign of a market bottom.

By Jim J. Jubak Aug 22, 2011 5:44PM
Jim JubakThose of us trying to keep our powder dry until we’re near the bottom -- acknowledging that we’re not going to catch the bottom -- are asking, when is the fear intense enough?

It certainly got very intense last week. The yield on a two-year Treasury note fell to 0.19%. The 10-year Treasury closed the week at 2.06%. That was slightly above the 1.97% low set on Thursday, which itself was the lowest level since 1950.

And that for the bonds of a country downgraded from AAA to AA by Standard and Poor’s. But the Treasury market is incredibly deep and liquid, and big investors know they can get in and out without roiling prices.

Nobody wants to buy equities -- at least until what I’m calling the Jackson Hole bounce Monday. The dividend yield on the S&P 500 sits at 2.25% as of Friday's close -- that’s the first time since 2008 that the stocks in this index have paid more than the 10-year Treasury.

Once the symbol of innovation, the company is being dismantled by its high-pedigreed board and the CEO of the hour.

By V.N. Katsenelson Aug 22, 2011 4:24PM
Anger and frustration are the two emotions pulsing through my veins as I write this. HP, once the symbol of innovation, is being dismantled by its high-pedigreed board and the CEO of the hour. I truly hope his tenure will be measured in hours, not years.

I vividly remember the early 2000s, when Carly Fiorina, then the CEO of HP, engineered the HP merger with Compaq. She argued that the merger was a must for HP's future to be bright. Walter Hewlett, the son of one of the founders, was publicly opposed to it, and I remember the drama of the proxy fight, the TV interviews and arguments from both sides, and the finale. Walter Hewlett lost, and the merger went through.  

But it was not the finale, because nine years and two CEOs later, HP has announced that the PC business, the one it so desperately wanted just a decade ago, is too hard a business and that it will look for ways to get rid of it. 

We still haven't returned to the market peaks of 2000. Could the bear market have a few more years left?

By Kim Peterson Aug 22, 2011 2:49PM
Short term, the market is nuts. This month has shown us more wild swinging than an elementary school playground.

But what about long term? One market observer argues that we could be in for a few more years of downtime. We're still in the middle of a bear market, with a little bit longer to go, writes Barry Ritholtz.

Look back over history, he writes in The Washington Post. The Dow Jones Industrials ($INDU) hit 1,000 back in 1966 and then did not return to that mark for 16 years.

Fast-forward to 2000, when the Nasdaq ($COMPX) was above 5,000, the S&P 500 ($INX) topped 1,500 and the Dow was just shy of 12,000. We still haven't returned to those levels.  

Should the superrich be taxed more? Not if the government keeps spending money unwisely, some wealthy folks say.

By Kim Peterson Aug 22, 2011 1:48PM
First Warren Buffett calls for higher taxes for the rich, saying the country should stop "coddling" them.

As you can imagine, that didn't sit well with them, and now they're fighting back.

The former chief executive of American Express (AXP) published an opinion piece in The Wall Street Journal saying taxes are being collected and spent unfairly. In the essay, Harvey Golub argues that the tax code is filled with favors to various industries and other groups.

Billionaire Charles Koch is also annoyed. He sent a statement to The National Review saying that "much of what the government spends money on does more harm than good." That sounds fairly hyperbolic, but let's give him a chance: 

After a massive rally in the price of the yellow metal, shares of gold miners begin to perk up.

By Anthony Mirhaydari Aug 22, 2011 1:45PM

A combination of recessionary fears, whiffs of possible bank failures in Europe and the widely held belief that the Federal Reserve will have no choice but to unleash additional, inflationary monetary stimulus has gold prices going vertical and rapidly nearing $1,900 an ounce. Really, gold's rise started back in July on fears over a default by the U.S. Treasury. Although disaster was avoided, the cloud of fear and uncertainty hasn't lifted. It's just gotten darker.


Unlike what was seen during silver's parabolic rise in the spring, precious-metals mining stocks haven't participated. But that's changing now, creating promising new opportunities for nimble investors and skeptics, like me, who are worried about speculative overheating in the physical gold market.


Not only do the newly empowered mining stocks give you exposure to the underlying commodity, but they give you an exposure to undervalued equities as an asset class. That's the smart bet since, as history shows, stocks tend to outperform raw commodities over the long haul. Here's why, along with a few specific recommendations.


Further weakness in three high-yielding oil stocks will present great buying opportunities and allow investors to earn steady income with less risk than Treasuries.

By MoneyShow.com Aug 22, 2011 12:29PM
By Tom Aspray, MoneyShow.com

The likely fall of Moammar Gadhafi’s regime in Libya is expected to push oil prices even lower, and in early Monday trading, Brent crude oil futures were down over 1%. If Libya is able to return to 50% of its former oil production, it would have a significant impact on global crude oil supplies.

The technical action of crude oil suggests that after a 38% slide from recent highs, it is closer to a low and another major drop is unlikely. 

Even if you take the view that the major global economies are entering a new recessionary period, this would dampen but not stop the growth in the emerging market economies. Given what I see as a finite supply of crude oil, prices are likely to be higher, not lower, over the coming years.

Many of the high-yielding global oil stocks have been hit hard along with the rest of the market, as investors have sold almost everything. On further weakness, these yields will become even more attractive, and having orders in place will allow you to lock in yields that have less capital risk than US Treasuries, in my opinion.


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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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