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Be wary of dire market forecasts

The most likely scenario is that the markets will begin to rise from here -- and that bounce is just beginning to take hold.

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Keep an eye on funds tracking silver, agriculture, construction, retail and the Dow.

By TheStreet Staff May 16, 2011 10:13AM

Image: Watching ETFs (© Don Carstens/Jupiterimages)By Don Dion, TheStreet

 

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

 

1. iShares Silver Trust (SLV)

 

As forecast in last week's "5 ETFs to watch," commodities have continued to behave in a volatile manner. The bullion-backed SLV's performance was particularly bipolar. During the early part of the week, SLV managed to pull off gains, but its strength was short-lived. By Friday, it had retreated to the previous week's lows.

 

Silver will continue to generate press in the week ahead as market watchers debate and discuss the longevity of the current commodities shakeup and look for ways to navigate it.

 

Although I continue to view precious metals as a promising long-term play, I urge investors to avoid being overly exposed to this asset class. By keeping exposure to materials like gold and silver small and concentrated, you can benefit from their long-term defensive nature while protecting against short-term volatility.

 

We've been fortunate to avoid a big sell-off in stocks. Stay conservative this week.

By Jamie Dlugosch May 16, 2011 9:49AM

If you are not trading in this market, you are either stubborn or ignorant. For those die-hard buy-and-hold followers, it is probably a combination of the two.

 

For the rest of us interested in making money in a market rigged against the little guy, we have no choice but to be nimble. Thank goodness Wall Street created exchange-traded funds.

 

While corporate profits continue to impress, stocks have traded sideways over the past two weeks. Consider yourself lucky that we have not gone lower.

 

I expect that to change soon. As such, I would strongly consider an ultra-short ETF for your portfolio this week. My choice would be ProShares Ultra Short Technology (REW).

 
Tags: etf

Recession-resistant shares like Merck and ConAgra are due for a rest. Look for them to hand over the lead as the 'roving bull market' trend continues.

By Jim Cramer May 16, 2011 9:12AM

the streetjim cramerIf you didn't know any better, you'd think we are already in a housing- and credit-led recession. There's no other way to read the stock charts and think otherwise.

 

The most standout performers are the companies that can be described only as extremely recession-resistant, whether it's tobaccos or the pharmas or the medical devices or the plethora of grain-buying food companies.

 

Meanwhile, techs, oils, industrials and banks are silently rolling over and causing some real underperformance.

 

In fact, if it weren't for the terrific performance in utilities, I would just say "Look out, double dip is here." I write "if it weren't for this," because in the Great Recession we used so little energy that utility stocks came totally unglued. Now stocks like Dominion (D) and FirstEnergy (FE) -- the latter always thought to be a complete dog -- are generating tech-in-its-heyday-like performance.

 

To save on its European labor costs, the fast-food icon will borrow the self-checkout model from retail. Will its US locations be next?

By InvestorPlace May 16, 2011 8:57AM

Image: Hamburger (© BananaStock/Jupiterimages)McDonald's (MCD) is trying to make fast food even faster.


The Financial Times reports that the world's largest fast-food chain plans to replace many of the cashiers at its 7,000 European restaurants with touch-screen terminals that allow customers to order and pay electronically.


The system is similar to what many consumers experience in supermarkets, retailers and gasoline stations that have opted for self-checkout to save on labor costs. McDonald's says the move is about making its European restaurants more convenient and efficient. It's also clearly about keeping down costs. If it succeeds, you can bet the trend will come soon to the U.S.

 

The odds are against stocks making a sustained comeback in the short term. Unless you’re an intra-day trader, the best advice is to hold on for the ride and make sure protective stops are in place.

By MoneyShow.com May 14, 2011 12:08AM
By Tom Aspray, MoneyShow.com

The rollercoaster ride continued last week in both the stock and commodity markets—if you’re keeping track, the S&P 500 was up three days and down two.

The commodity markets were also very choppy, and there are some worrisome signs in the energy patch. The Energy Select Spyder (XLE) and many of the biggest oil companies, including ExxonMobil (XOM), Chevron (CVZ) and Schlumberger (SLB) have completed top formations. (For full technical appraisal, please see Big Oil’s Big Top.)

It looks as though my view is at odds with the big hedge funds, as The Wall Street Journal reported on Friday that several of the largest hedge-fund managers were bullish on the energy sector.

With Friday’s sharply lower close, the stock market is in a precarious position for the short term, and the odds now favor further selling this week. This high volatility is not an investor or a swing trader’s friend, but those who trade intra-day may be having a good time.

The number of bulls according to the AAII sentiment numbers continues to decline, and is now at 30%, not far above last summer’s lows. For specific price levels to watch, see below.
 
Tags: goldoil

A new grain forecast is bringing down farm-related stocks -- and creating a good buying opportunity.

By Jim J. Jubak May 13, 2011 3:47PM
Jim JubakThe May 11 crop forecast from the U.S. Department of Agriculture knocked the chaff out of the grain market. Corn fell in price by the most allowed on the Chicago Board of Trade, and wheat and soybean prices followed downward.

The cause of the plunge? The USDA said that grain inventories at the end of the harvest year will be larger than expected.

Corn stockpiles will climb to 900 million bushels, for example. That’s a significant 23% higher than the 730 million bushels this year. Of course, this year’s 730 million bushels is the lowest stockpile in 15 years.

You can understand why that kind of switch would have sent some commodities traders scurrying to take profits. The price of corn has doubled in the last year, as traders bet that the slim margin of error represented by that 15-year low would generate enough fear of shortages to keep prices rising.
 

The company wisely locked in prices for coffee before they hit a 34-year high. But what will happen next year?

By Kim Peterson May 13, 2011 3:21PM
Coffee prices hit a 34-year high earlier this month, but Starbucks (SBUX) doesn't seem to be too worried.

The company has already locked in its coffee costs for the year, John Culver, the president of Starbucks Coffee International told Swiss newspaper Tages-Anzeiger. So as other food producers struggle with the rising costs of raw ingredients, Starbucks has kept a lid on costs of its most important material.

Culver said he thinks the cost of coffee will come down. "We think that these prices are not based on facts given there is no supply problem," he told the newspaper, according to Reuters. "Speculators are at work here." 

With stocks and commodities sliding as the US dollar strengthens, here are 2 new short ideas to profit from the decline.

By Anthony Mirhaydari May 13, 2011 2:39PM

For months, the bulls have had it all their way. The anti-dollar "carry trade" -- fueled by a falling dollar -- helped push up risky assets across the board as hedge fund types crowded into popular trades like crude oil, silver and foreign stocks. It was all about momentum. And the gauge of sentiment was the undulations of the euro-dollar exchange rate. When it was rising, all was right in the world.

 

That's changing now as the U.S. dollar perks up against the euro in a big way. Why? Concerns over inflation, slowing economic growth and a dramatic bursting of the commodities bubble as speculators get squeezed out of crude oil and precious metals. 

 

In my recent columns and blog posts, I've highlighted all of these concerns and have recommended targeted short positions against energy and emerging-market stocks. Today, I want to recommend a few more that are focused mainly on European equities, which are showing fresh signs of weakness as the euro drops hard.

 

PepsiCo and CSX are among the companies that have recently increased their payouts.

By TheStreet Staff May 13, 2011 1:39PM

By Jonas Elmerraji, StockPickr

 

Dividend stocks had another strong week last week, with dozens of firms announcing dividend payouts or increases timed around their earnings releases for this quarter. While the market isn't currently reflecting the fundamental outperformance stocks are showing this earnings season, investors are turning to dividend-payers to get gains out of their portfolios.

 

With 2011 shaping up to be the biggest year for dividends since before the market crash of 2008, it makes sense to take a look at what dividend stocks are offering. That's because, contrary to popular belief, dividend payouts and capital gains aren't mutually exclusive.

 

On a total return basis, dividend stocks significantly outperform their non-payer peers as a whole. Over the last 36 years, dividend stocks outperformed the rest of the S&P 500 by 2.5% annually, and they outperformed nonpayers by nearly 8% every year, all while paying out cash to their shareholders, according to a study from NDR.

 

The retail heavyweights hope to offset struggling domestic sales with overseas growth.

By TheStreet Staff May 13, 2011 1:35PM

By Jeanine Poggi, TheStreet

 

Two retail giants, struggling at home, hope to have better luck overseas.

 

Wal-Mart  (WMT) and Gap (GPS) both announced expansion plans to their international business in the last 24 hours; Wal-Mart with the acquisition of a minority stake in a Chinese e-commerce company, and Gap with the announcement that it is moving its brand into Serbia and the Ukraine.

 

The discount retailer purchased a stake in China's Yihaodian, which sells groceries, consumer electronics, clothing and other items. The Chinese company was launched in July 2008.

 

Watch your step on the way down.

By Motley Fool Pick of the Day May 13, 2011 1:05PM

By Rick Aristotle Munarriz

 

You don't need to look too far to bump into pessimism.

 

Remember the recovery in the housing industry? We're still waiting on that one. Real-estate portal Zillow.com is reporting that home sale prices fell 3% during the first quarter, off by more than 8% over the past year. According to Zillow, real-estate prices have dipped for 57 consecutive months.

 

That's a nasty streak, unless you happen to be in the market for a new home without one to sell. It gets worse.

 

There are still plenty of companies posting lower earnings than they did a year ago. Let's go over a few of the names that are expected to go the wrong way on the bottom line next week.

 

A recent Bloomberg Poll shows that 68% of investors, analysts and traders have an unfavorable view of the potential presidential candidate. With video.

By Kim Peterson May 13, 2011 12:38PM
The following post is from Bloomberg News:

Donald Trump, the real estate developer-turned-reality-television star who promotes his business acumen as he ponders a U.S. presidential campaign, is a bust with global investors.

By 68% to 14%, the billionaire is viewed unfavorably by respondents in a Bloomberg Global Poll of investors, analysts and traders. In the U.S., where Trump is more widely known, his unfavorable rating climbs to 79%, while those viewing him favorably rises to 17%.

"The last thing this country needs is an uber-political, self-serving, egomaniacal media junkie whose all-sizzle-no-steak approach to life and politics only distracts us all from the real issues and problems of our country," said poll respondent Douglas Schoninger, 50, president of DJS Capital Management Inc. in New York.

Post continues after this video about the Bloomberg poll about Trump: 

Do you check your phone even before getting out of bed? You're not alone, one study shows.

By Kim Peterson May 13, 2011 12:07PM
How addicted are we to the Internet? One recent study shows that 35% of U.S. smartphone users check in with their phones even before getting out of bed in the morning.

The phone is the first thing these people touch when they wake up, and the most common activity is checking their Facebook accounts. About 18% of Facebook users log in while their heads are still on the pillow, according to the study by Ericsson ConsumerLab.

Even right after rising from bed, about a quarter of U.S. smartphone users go on to the Internet, and a quarter check their email.  

As you'll see from the analysis of these 4 blue-chip bank stocks, the fundamentals in the financial sector are extremely weak.

By MoneyShow.com May 13, 2011 11:39AM
By Tom Aspray, MoneyShow.com

Since the stock market bottomed last summer, I have been concerned about the lack of participation of the financial sector in the ensuing rally.

The numbers don’t lie—the Financial Select Spyder (XLF) closed 2010 at $15.95, and settled Thursday at $16.00. In comparison, the S&P 500 is up 7.2% over the same period.

In February, I took a technical look at both Bank of America (BAC) and Citigroup (C), which were both reaching critical junctures. At the time, I advised having your stops in place to avoid big losers in your portfolio. Since then, they are down 14.6% and 9.3%, respectively.

Besides keeping these stocks out of your portfolio, the other major concern is what will happen once the stock market begins a meaningful correction. If the financial stocks, like the banks, are still weak when the market tops out, they are likely to lead the market on the downside.
 

Google stumbles into netbook market with Chromebook. Big Oil battles the Senate. Comcast turns friends into enemies.

By TheStreet Staff May 13, 2011 10:48AM

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

 

5. Google hits the books

 

Google (GOOG) should have Googled "netbook" before it took the big plunge into Chromebook.

 

Seemingly unaware of the short, tragic history of the cheap, underpowered mini-notebook category, Google now holds up its breakthrough invention in personal computing: the Chromebook -- a cheap, underpowered mini-notebook with a three-year contract.

 

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[BRIEFING.COM] The major averages hover just below their highs with one hour remaining in the final session of the week.

Tomorrow, most global markets, including the U.S., will be closed for Good Friday, while Japan's Nikkei and China's Shanghai Composite will remain open. On Monday, the New York Stock Exchange will open at its regular time, while markets across Europe and Hong Kong's Hang Seng will remain closed for Easter Monday. Nasdaq +17.71 at 4103.94... NYSE Adv/Dec ... More


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