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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.


The market seems to have moved too far too fast, which makes a short-term setback likely.

By Jun 28, 2011 12:10PM
By Tom Aspray,

Monday’s strong gains caused some improvement in the short-term technical outlook for the stock market. A close in the S&P 500 above 1,288 on positive breadth will help the bullish case. The price action in the long Treasury ETFs and too-high bullish sentiment indicate that, for now, the Treasury market may have a higher risk than stocks.

Earlier in the year, Bill Gross, the head of PIMCO, the biggest bond shop, turned bearish on bonds because he was expecting rates to rise. Instead, the yield on ten-year Treasury notes peaked at 3.73% on February 8 and has since plunged to a low of 2.87%.

As the global stock markets turned lower in May and the precious metals collapsed, investors turned away from risk and the flight to Treasuries picked up steam. Of course, adding fuel to the fire has been the end of QE2 and increased Eurozone debt worries.  Money has also been moving out of high-yield, or junk bonds, as fears of a new recession have made these bonds too risky for some investors.

The sector is a risky place to make bets this summer, but the high end could provide a comfortable hideout.

By TheStreet Staff Jun 28, 2011 11:36AM

TheStreetImage: Shopping bags (© Photodisc Red/Getty Images)By Jeanine Poggi, TheStreet


Safety in retail stocks is a bit of an oxymoron.


The sector has been wrought with fear, as sales fell in May for the first time in 11 months, and companies face rising sourcing costs and shaky consumer sentiment.


But relatively speaking, the best place to ride out this summer's inflationary pressures is in luxury, according to analysts.


Goldman Sachs' (GS) U.S. luxury department store same-store sales index increased 13.2% in May, a significant acceleration for March-April trends of 7% to 8% and February's 11.8% increase.


The automaker solved its problems in bankruptcy court. Can the ball team do the same?

By TheStreet Staff Jun 28, 2011 10:38AM

By Ted Reed, TheStreet


When you really think about it, bankruptcy court has become a place where miracles happen.


It's a place where the Obama administration, in perhaps its greatest achievement, fixed GM (GM) and Chrysler.


Also in bankruptcy court, Delta (DAL)transformed itself from a bloated regional airline into an international airline that was, briefly, the world's biggest. Additionally, in a courtroom merger, US Airways (LCC) and America West, two small, weak, near-death airlines remade themselves as a financially fit survivor.


This brings us to the subject of the Los Angeles Dodgers.


Clothing companies that raised their prices to offset soaring materials costs will see their margins expand as the fiber gets cheaper.

By Jim Cramer Jun 28, 2011 8:52AM

the streetjim cramerWe talk about it on the way up, but we rarely talk about it on the way down.


I am talking about the price of cotton, which has plummeted to become one of the worst of all the horribly performing commodities after a truly stellar run. On Monday, cotton was down the limit, yet did you hear anyone mention it? I didn't.


This retreat, something that was self-correcting on the basis of new plantings, has wiped out the big gains of the year -- the ones that threatened to crush Polo Ralph Lauren (RL), VF Corp. (VFC) and Phillips-Van Heusen (PVH) as well as Under Armour (UA), Jones Group (JNY) and Lululemon Athletica (LULU). Nobody seems to care, even as these companies have put through price increases that look like they have stuck, according to retailers.


These companies are going to have amazing margin expansion because they are not going to roll back those price increases. Why did we hear about margin contraction for months when cotton was on the way up but nothing as it has come down? And "come down" certainly is a dainty term for this crash.


The company is adding more revenue-generating activities to monetize its share of China's Internet search traffic.

By Jim J. Jubak Jun 27, 2011 8:58PM
Jim JubakThis deal quite probably wouldn’t pass regulatory scrutiny in the United States. Good thing, then, that it's being done in China.

Baidu (BIDU), China’s leading Internet search company, is making a $306 million investment in Qunar, the leading Internet travel search engine. The deal, set to close in the third quarter, will make Baidu the majority shareholder in Qunar.

Meanwhile, back in the United States, three state attorney generals have begun antitrust investigations into Google’s
dominance of online search. Google's (GOOG) share of the U.S. search market dipped ever so slightly (to 64%) in May.

Google’s share of the online search market in China fell to 19.2% in the first quarter, from 19.6% in the fourth quarter of 2010, as the company’s refusal to self-censor its content continued to erode traffic. Baidu’s market share
climbed to 75.8% from 75.5%, according to Analysys International.

Upcoming weakness in long-term Treasury bonds will send interest rates climbing again.

By Anthony Mirhaydari Jun 27, 2011 4:03PM

Investors are feeling frazzled, which is completely understandable. The selling pressure seen over the past few months has resulted in one of deepest oversold conditions since the late 1990s. Serious stuff.


People who were just beginning to feel optimistic again got broadsided and sought the safety of U.S. Treasury bonds. But this is no refuge, as I've noted in recent blog posts. I expect the combination of higher inflation, re-accelerating economic growth and uncertainty regarding the fight over the U.S. debt ceiling to weigh on bond prices.


But there are consequences of this event even for people not invested in T-bonds: Long-term interest rates are headed higher. Here's why and how you can take advantage. 


Funds that invest in Treasury inflation-protected securities reap rewards as inflation picks up. But not everyone agrees that they're the best choice.

By TheStreet Staff Jun 27, 2011 12:45PM

Image: Value investing (© Tetra Images/Tetra images RF/Getty Images)By Stan Luxenberg, TheStreet


During the past 12 months, the consumer price index rose 3.6% and oil prices climbed. Seeking to benefit from rising prices, investors scrambled to buy Treasury inflation-protected securities, or TIPS.


Inflation-protected funds, which invest in TIPS, returned 8% in the past year, outpacing the Barclays Aggregate Bond Index by nearly 3 percentage points, according to Morningstar.


Should you join the crowd and buy inflation funds? Perhaps. Many financial advisers argue that inflation funds make good choices for investors who seek to protect their purchasing power. But now some advisers have become lukewarm about TIPS, arguing that they have gotten a bit expensive. A vocal minority says investors should avoid TIPS altogether.


The search giant has long struggled with social networking. Analysts say adding one of these companies would immediately boost its presence in the popular space.

By TheStreet Staff Jun 27, 2011 12:25PM

Image: Woman with laptop (© Mike Watson Images/Corbis)By Olivia Oran, TheStreet


The recent FTC probe into Google's (GOOG) dominance in the Web search market, which alleges Google has abused its market leading position by engaging in anti-competitive behavior, prompts the question: Is Google too big in search?


"Any company that gets nearly all of its money from one product is vulnerable," said Josh Bernoff, an analyst with Forrester. "The idea that they need to diversify their business is certainly valid."


If Google's position in the search market is threatened at all by the lawsuit, the pressure on the company to expand into new areas becomes intense. Google, which generates about 90% of its revenue from its core search business, is already diversifying into display and mobile ads.


But one area where Google has been unable make a name for itself is social networking, which is dominated largely by Facebook.


These global funds have badly underperformed major averages, and the charts indicate further weakness lies ahead.

By Jun 27, 2011 12:07PM
By Tom Aspray,

The dismal performance of the US market on Friday and the sharp decline in several of the European markets make the early action this week more important. While the S&P 500 closed right on important support and very close to the recent lows, some averages do not look as bad.

I will be watching the action of the Dow Transportation Average and the Russell 2000, as both are still well above the lows they made earlier in June. The transports in particular have been a good market barometer since the March 2009 lows, as they have led the market out of several corrections. The NYSE McClellan Oscillator also still shows a pattern of higher lows.

Though the small 0.9% gain in the S&P 500 so far in 2011 has disappointed many investors, things are worse overseas. The MSCI World Average is down 1.5%, and if you were in some of the single-country ETFs, their performance was worse than that.

Relative performance, or RS analysis, can also be useful on a global basis, as investors can compare the performance of a country ETF to global market average like the MSCI World Index.

This can be a two-step process for US investors, who first can find the country ETFs with the best RS analysis versus the world and then see how the same country ETFs compare to the performance of the S&P 500. This will allow for more informed investing decisions.

This analysis of four widely followed country ETFs will illustrate why they have performed worse that the MSCI World Average and the S&P 500 and will highlight the signs that will indicate when these funds become attractive investments once again.

The companies head east for growth, but the route is not necessarily smooth.

By TheStreet Staff Jun 27, 2011 11:51AM

Image: Great Wall of China (© Photodisc/SuperStock)By Ted Reed, TheStreet


More and more, America's key transportation manufacturers like Boeing (BA) and GM (GM) are looking to China to add sizzle to their shares.


Boeing's recently released current market outlook, the leading annual forecast of air transportation growth, underscores China's importance. Boeing said 2010-30 air traffic within China will grow at 7.5%, compared with 7% in the Asia Pacific region, 4% in Europe and 2.3% in North America. In 2010, the Asia Pacific region was the world's biggest air travel market for the first time, Boeing said.


Meanwhile, a new report by Standard & Poor's notes that China auto sales reached 18 million in 2010, compared with 11.5 million in the U.S. China was easily the world's largest light-vehicle market.


Funds tracking the dollar, Italy, oil, agriculture and autos will be in the spotlight.

By TheStreet Staff Jun 27, 2011 10:38AM

Image: Investing in ETFs (© Tom Grill/Corbis)By Don Dion, TheStreet


Here are five exchange-traded funds to watch this week.


1. PowerShares DB U.S. Dollar Index Bullish Fund (UUP)


The U.S. dollar received some welcome strength during the second half of last week as jittery market action drove investors to safety. Further aiding the greenback's ascension were comments from Federal Reserve Chairman Ben Bernanke, who continued to write off the likelihood of additional quantitative easing.


QE2 is scheduled to end on June 30. The anticipation leading up to that date, combined with general market turmoil, could result in some interesting action from dollar-tracking UUP in the days ahead.


Earnings season is coming, and underlying positives bode well for stocks.

By Jamie Dlugosch Jun 27, 2011 9:59AM

So close and yet so far, stocks got off to a nice start last week but ran into the wall of worry. By the end of the week, early gains disappeared as the S&P 500 index closed down fractionally for the period.


That puts us back on the losing side of the ledger after a one-week reprieve. The only positive is that technical lows on the S&P 500 index have held. A breech could trigger a complete washout turning a small correction into something quite worse.


In the absence of substantive news, bears are winning the speculative battle. It is far easier to be negative than positive in the current environment.


Thankfully, the second quarter ends this week. That means earnings season is near. My prediction is that it will be strong corporate profits that will turn things in the market.


The ETF to buy this week in advance of what should be a strong rally is SPDR S&P Homebuilders (XHB).

Tags: etf

The amusement park operator will see its share price halved and could take investors on a roller-coaster ride.

By InvestorPlace Jun 27, 2011 8:51AM

By Jeff Reeves, Editor of

Amusement park giant Six Flags Entertainment (SIX) has seen its stock price climb steadily over the past year, much like the steep hills its roller coasters climb right out of the station.

Monday, that stock price is going to lurch downward like the first gut-wrenching descent of that coaster as Six Flags' stock splits in two.

Sounds scary for investors and thrill-ride fans alike, right? Well, relax. In reality, this white-knuckle ride doesn't change a thing and may actually be profitable for savvy traders who know what to do. 

This market seems to believe that growth is impossible without inflation. It's lying.

By Jim Cramer Jun 27, 2011 8:45AM

jim cramerIt happened in passing. Someone blithely mentioned it on some show that went in one ear and out the other. It was a throwaway. The line? "Sure, so what if inflation has peaked?"


I wanted to laugh because it shows you how out of control this moment is versus what we should be thinking, how wrong this market may be on a daily basis compared with the pathetic way that it trades. Can a market, I ask myself, be disingenuous? Can markets be mendacious?


Because it sure seems that this one is.


Somewhere along the line we forgot what the business cycle is and how it affects stocks. In 2008, we had a phony multi-month rally based on the increase in commodity prices. Underneath, we all knew that aside from Freeport (FCX) and National Oilwell Varco (NOV), the two big headliners of that rally, the market was as sick as a dog, with whole segments long-since faltered.


The markets have largely shrugged off damaging world events until recently. Now the possibility of another downturn is too stark to ignore.

By Kim Peterson Jun 24, 2011 3:43PM
The ever-gloomy Nouriel Roubini lays the scenario for another recession. If there was ever a time for it to happen, now would be right.

First, he looks at the combination of weird slams to the global economy this year. The earthquake in Japan disrupted some of the world's supply chains. The turmoil in the Middle East has contributed to the runup in oil prices and the corresponding spike in gasoline prices (both of which, thankfully, have come down).

Add to that the financial instability in Greece, Ireland and Portugal. And don't forget the rising prices for food and commodities, stoking concerns about high inflation. 


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[BRIEFING.COM] The stock market finished the Wednesday session on an upbeat note with the Nasdaq (+1.3%) ending in the lead. The S&P 500 settled higher by 1.1% with all ten sectors posting gains.

The benchmark index spent the entire trading day in the green, rallying to new highs during the last hour of action. The tech-heavy Nasdaq, meanwhile, briefly dipped into the red during morning action, but was able to recover swiftly.

Stocks began the trading day with modest gains ... More


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