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Get your defensive plan ready

Indexes might not be in correction territory, but they're getting closer. Now's the time to consider what moves to make.


Gold, consumer goods and inflation-adjusted bonds suggest we should brace for rising prices.

By InvestorPlace Jul 25, 2011 9:34AM

By Jeff Reeves, Editor,

jeff reeves investorplaceThere has been a lot of talk about unemployment lately, as a number of recent jobs reports have been disappointing. At the same time, the media remain focused on the looming Aug. 2 deadline to raise the debt ceiling. That has pushed one of the most pressing economic issues to the back seat. That issue is, of course, inflation.

Investors need to keep an eye on inflationary pressures for many reasons. Rising costs cut into margins for many industries, whether it's fuel costs for airlines or food costs for restaurants or materials costs for manufacturers. And, of course, you have to remember that your nest egg grows only if it can top the rate of inflation. A 1.2% high-yield savings account is actually a money-losing investment if the annualized rate of inflation hits 1.3% or higher.

The Federal Reserve and many politicians continue to insist that inflation is insubstantial. Maybe. But there also are signs it's a growing problem -- and five big reasons inflation is on the march:


As deadlock continues over a debt deal, ride out the impasse with good stocks and some gold and cash.

By Jim Cramer Jul 25, 2011 8:45AM

jim cramerthe streetWhat happened? Did the politicians learn enough from the bad old Bear-Lehman days but not enough to make a difference? Is that where they came up with this oh-so-tense "by the time the Asian markets open" nonsense? Did they jog the cobwebs free from 2008, dust off the game plan and just go out with it, as if this is some sort of a simulated dramatic crisis?


It does seem that stupid, doesn't it? Almost as if they want the market to crash so each side can say, "We had to do it to save your 401k." That way everybody's butt is protected. They can say, "We did it for you, because look what happened when we didn't get it open in time for Asia."


Unfortunately for the "lawmakers," it looks like we didn't get much of a crash after all. It looks like we were as prepared for this one as we were unprepared for Bear. And where the heck is JPMorgan's (JPM) Jamie Dimon when you need him?


Last week's rally will need to last into an early-week deal in Washington on the debt ceiling, or we could see a correction ahead.

By Jul 24, 2011 12:46PM
By Tom Aspray,

The dual Euro and US debt crises have been dominating the market action for at least the past several weeks, but now the Eurozone countries appear to have taken definitive action.

With the agreement to work out Greece’s debt problem, it seems clear that the Eurozone leaders are committed to taking whatever steps are necessary to keep the contagion from spreading.

Most technical analysts, but few fundamental analysts, realize the important role that psychology plays in the stock market. I think it is one of the more important factors in determining the market’s direction on a week-to-week or month-to-month basis. Fundamentals, I feel, are the key factor in the major trends.

The global debt fears have kept many out of the stock market since the May highs, and a failure to act on the debt ceiling could further depress the market. Conversely, I think raising the debt ceiling before the deadline would give the US and global stock markets quite a boost. (The European markets closed with nice gains Friday.)

The earnings reports by technology giants Google (GOOG) and Apple (AAPL) clearly have raised the hopes for a further economic recovery. Without the debt crisis deadline looming over the market, stocks would be much higher.

Technically, last week’s action suggests that the uptrend from the June lows has resumed, but further strength is needed this week. It will be important for the other major averages, including the S&P 500, Dow Industrials, and Nasdaq-100 to join the Dow Transports in making new highs.

Any company with a 45% share -- and growing -- of a Chinese market is worth your attention.

By Jim J. Jubak Jul 22, 2011 6:58PM
Jim JubakAfter moving up 8% in the days before its third-quarter earnings report, it would have taken something very special to keep shares of Johnson Controls (JCI) climbing on the actual news.

Didn’t happen. On Wednesday, the company merely reported record net sales of $10.4 billion, a 21% gain from the third quarter of 2010, and beat Wall Street projections of 54 cents a share by a meager 4 cents a share. And so the stock dropped 4.4% on the day.

Might not be a bad time to pick up shares of a company projected to grow earnings by 24% in fiscal 2011 (which ends in September 2011) -- and 35% in fiscal 2012 -- but trading at just 17.7 times trailing 12-month earnings and 12 times projected earnings per share. (The stock is a member of my Jubak’s Picks portfolio.)

Johnson Controls had two problems with its earnings report:

US Bancorp is one U.S. bank that's actually seeing banking business grow.

By Jim J. Jubak Jul 22, 2011 6:40PM
Jim JubakNow here’s a bank earnings report investors can really like.

Strip away all the one-time items, and the gains from reducing reserves against potential loan defaults, and the core banking business at US Bancorp (USB) actually made more money this quarter.

So much money, in fact, that even without the items that have made earnings at big New York banks such as Citigroup (C) look better than they were, earnings at US Bancorp -- a member of my Jubak’s Picks portfolio -- beat Wall Street estimates for the second quarter by 3 cents a share.

Not that US Bancorp looked shabby in a head-to-head comparison on that basis, either. Provisions for credit losses dropped 50% in the quarter, and the bank released $175 million from reserves. That brought provisions for credit losses down to $572 million, from $1.14 billion in the second quarter of 2010.

Credit Suisse gets investigated. Carl Icahn raises his bid for Clorox. Lions Gate hires Charlie Sheen. Rupert Murdoch gets pie on his face.

By TheStreet Staff Jul 22, 2011 4:19PM

By Gregg Greenberg, TheStreet


Here is this week's roundup of the dumbest actions on Wall Street.


5. Credit Suisse gets clocked


Credit Suisse (CS) admitted late last week that the U.S. Justice Department is digging into its offshore business as part of a larger probe into suspected American tax cheats. Credit Suisse said it will work with the Feds within the parameters set by Swiss banking secrecy laws.


After blasting higher on fears over the US debt ceiling and a second Greek bailout, metals look vulnerable to a big pullback.

By Anthony Mirhaydari Jul 22, 2011 2:51PM

With all the chaos and volatility of the past few weeks -- from concerns over the economy, the U.S. debt ceiling, and a new, more dangerous phase in the European debt crisis -- one asset class has prospered. I'm taking about precious metals.


Since July 7, Gold SPDR (GLD) is up nearly 5%, while iShares Silver (SLV) has gained more than 10%. Over the same period, the S&P 500 is down around 1%, junk bonds are essentially unchanged, and iShares 20+ Treasury Bond (TLT) has added about 1.9%. I recommended that my readers and newsletter subscribers take advantage of the move back on July 12 via silver miner Silver Wheaton (SLW) and the leveraged ProShares Ultra Gold (UGL).


Now things are changing as investors regain their confidence and these big political concerns begin to fade. That leaves precious metals vulnerable to nasty short-term pullback. While I am still optimistic about the medium-term prospects for silver and gold, as I outlined in a recent column, now's the time for active traders to sell their positions and for long-term investors to step aside. Here's why.


Expect short-term pullbacks in these precious-metals ETFs to set up good buying opportunities next week.

By Jul 22, 2011 1:09PM
By Tom Aspray,

Monday's close above $1,600 in the August gold futures contract got the attention of many investors and traders, but instead of reacting bullishly, there were quite a few who were taking profits on some of their positions.

Even more surprising was that some were even looking to trade the expected pullback while remaining bullish for the long term. Apparently, some think the recent surge was a blow-off top, but technically, the charts suggest that we just resolved the flag formation, which is a classic continuation pattern.

Experienced traders also know that trading against the major trend has wiped out its fair share of trading accounts.

The volume analysis supports this viewpoint, as it confirmed the recent breakout and the weekly on-balance volume (OBV) has continued to make new highs with prices. This has clearly been a year for sticking with the weekly trend analysis, as the short-term swings have been difficult to trade. For example, on July 1, the SPDR Gold Trust (GLD) gapped down to support, and then on July 5, after the holiday weekend, gapped higher, marking the start of the recent rally.

The billionaire investor has remained steadfast in his optimistic outlook.

By TheStreet Staff Jul 22, 2011 12:13PM

Image: Looking Up (© Stockbyte/SuperStock)By Don Dion, TheStreet


Maintaining a bullish outlook on the markets over the past few years has been difficult. With talk of double dips and stall-outs cropping up at every sign of weakness, even the most optimistic individuals can begin to question their views and the strength of the worldwide economic recovery.


Despite these bouts of often deafening uncertainty and resounding negative sentiment, it is impossible to deny the market strength we have seen since the U.S. financial crisis and global market meltdown. Now all three major U.S. indexes are within range of pre-crisis levels. The Nasdaq ($COMPX), in fact, has recovered all of the ground lost during the period and is currently sitting at 2007 levels.


One individual who has managed to hold strong during periods of both optimism and doubt has been the Oracle of Omaha, Warren Buffett. On numerous occasions, the billionaire investor has taken doubters to task, presenting a consistently optimistic outlook on the recovery, especially that of the United States.

Tags: etf

Steve Jobs and company are sitting on more than $76 billion in cash. A streaming video catalog would bolster their gadget offerings -- and pose a challenge to Netflix. With video.

By InvestorPlace Jul 22, 2011 11:15AM

By Jeff Reeves, Editor,

Apple Inc. (AAPL) has made a habit of posting stunning profits, then hoarding its cash, quarter after quarter. Apple earnings this week stuck to the playbook, with profit more than tripling to $7.31 billion and helping push the tech giant's war chest up to a stunning $76.2 billion in cash and equivalents.

But what good are those profits if Apple doesn't put them to use? Many investors have been wondering for a while just what Steve Jobs and company plan to do with all that cash, and this week, a rumor emerged that might provide an answer.

Apple might buy online TV programming powerhouse Hulu.


As prices of the yellow metal continue to test new highs, investors should consider other hard assets to diversify their holdings.

By InvestorPlace Jul 22, 2011 9:28AM

By Jeff Reeves, editor

Gold prices just won't quit. The precious metal rolled back a bit in May but has come roaring back, with prices up about 8% in three weeks to top $1,600 an ounce. And in the long term, gold has seen even more dramatic gains -- up about 50% in the past year and a half, compared with a price of about $1,080 in late January 2010.


The company is a cash machine. I bet it bottoms and starts going right back up.

By Jim Cramer Jul 22, 2011 9:08AM

jim cramerthe streetIf the pattern holds up, you should buy PepsiCo (PEP) right here. What's the pattern? One of forgiveness, where people rethink their negativity, come back in and buy.


For example, people were upset with United Technology's (UTX) quarter, squabbling over the loss of aircraft engine orders, bemoaning the results of Pratt & Whitney. By Thursday, the stock was flying as people realized there wasn't really anything all that wrong and it could be a one-time bummer.


Or take the stock of Goldman Sachs (GS), a company that disappointed investors and was decidedly downbeat about the future. Now the stock is up big and doesn't seem like it's going to quit -- good call by Doug Kass the other day to buy the ugliness.


Too much selling can reverse course with one positive earnings report.

By Jamie Dlugosch Jul 21, 2011 6:59PM

Occasionally the market gets it wrong. When a company reports results that are contrarian to conventional wisdom of investors, big profits can follow.


The entire financial sector has been weak for most of 2011. Banks, Wall Street firms and regional brokerage firms have been pummeled by aggressive selling. On the surface the action was very much a broad brush and may make bank stocks stupid cheap.


As such traders digging a bit deeper could exploit valuation discrepancies compared to reality. The key to success of any earnings trade is to identify a company that is likely to surprise those betting against a certain outcome.


If actual results surprise, shorts will cover and previous sellers are likely to return as buyers sending share prices higher. The key is to accurately predict results based on prior performance with a good idea of what will drive a particular company’s shares higher.


Case in point is Piper Jaffray Companies (PJC)


A miss on both ends of the income statement shears shares by 34%.

By Motley Fool Pick of the Day Jul 21, 2011 4:17PM

By Rick Aristotle Munarriz


Travel deals publisher and Groupon coattails hopper Travelzoo (TZOO) was fed to the lions today after a shocking quarterly miss.


This morning's report would seem to be spectacular if you didn't know what the expectations were. Revenue climbed 34% to $37.6 million, the company's headiest growth in four years. Despite investing to expand into 27 new local deal markets and testing its first ever television spot, net margins improved with earnings soaring 51% to $4.9 billion -- or $0.30 a share.


However, the shares opened 30% lower today because Wall Street was banking on a profit of $0.38 a share on $39.9 million in revenue.


Missing on one end of the income statement is painful, but missing on both ends is an unforgivable mistake.


Stay away from shares of Bank of America for now, but if the stock price drops further a buying opportunity may arise.

By Jim J. Jubak Jul 21, 2011 1:42PM
Jim JubakIt’s official: Citigroup (C) is no longer the most troubled big U.S. bank.

That honor now goes, hands down, to Bank of America (BAC).

Tuesday morning, the bank posted the largest quarterly loss in its history, thanks to a nasty combination of problems. Revenue continued to slide, and losses from defective mortgages continued to climb.

Revenue, including mortgage costs, plummeted to $13.5 billion -- a 50.2% drop from the second quarter of 2010. Even excluding those mortgage costs, revenue still fell by 10% from the second quarter of 2010, and declined 2.2% from the first quarter of 2011.

Earnings for the second quarter, including these mortgage-related charges, came to a loss of 90 cents a share.


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[BRIEFING.COM] The S&P 500 trades higher by 0.9% with one hour remaining in the session. Five of six cyclical sectors enter the last hour of action with gains of at least 1.0% while financials (+0.7%) continue underperforming. Bank of America (BAC 15.99, -0.40) weighs, trading lower by 2.4% after reporting a bottom-line miss on above-consensus revenue.

Elsewhere, all four countercyclical groups trail the broader market. Consumer staples (+0.8%) follow not far behind the ... More


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