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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Up-and-coming professional investors such as Donald Yacktman and Thomas Forester are turning in heroic performances despite challenging market conditions.
By Frank Byrt, TheStreet
Investors looking for direction in the stock market from star fund managers of the past decade, such as Bill Miller, Ken Heebner and Bruce Berkowitz, have realized they're sometimes as confused as the rest of us are.
Unprecedented events such as the near-default of U.S. government bonds, a painful European debt crisis that seems to have no end and natural disasters abroad and at home have come to a head, pummeling almost everyone's portfolio, save for the extraordinary. Those include Warren Buffett (a sweetheart deal brokered with Bank of America (BAC) last week that will give him $300 million a year in special dividends), Carl Icahn (a reported $2 billion windfall by betting against U.S. stocks this month) and John Thaler (his JAT Capital Management hedge fund is among the best performers in the world this year, up more than 30%).
The benchmark S&P 500 Index ($INX) of U.S. stocks has fallen 6.6% this year, sending mutual fund investors for the exits -- or at least to the relative safety of bond funds as they see returns suffer on once high-flying funds. But there are stock-fund managers building reputations as they assemble wealth for clients. They may not be stars, but they soon may be if their hot hands continue.
Here's a preview of Ciena Corp in advance of Thursday's earnings report
There is a tremendous amount of noise in the market that can influence stock price. Ultimately, the value of a stock is based on the present value of future profits.
When a company reports earnings results, market participants receive a key piece of information that can be used to determine the price of a stock. For a brief moment in time after a company releases its operating performance, the market will adjust pricing based on how the numbers match up against current expectations.
In many cases stocks of companies reporting results will move significantly higher or lower.
Understanding how investors use earnings against Wall Street estimates creates a profitable trading opportunity. Using a few key variables combined with understanding how the market will react to new information can guide you how to trade a stock in advance of the news being reported.
Use the Earnings Predictor to help you identify winning trades. On Thursday Ciena Corp. reports earnings for the quarter ending July 31, 2011.
ETF investors who plan to follow the developments at Apple should have their sights set on the PowerShares QQQ fund.
By Don Dion, TheStreet
Here are five exchange-traded funds to watch this week.
Steve Jobs' decision to step down from his CEO post at Apple (AAPL) sent shockwaves across the markets last week. Interestingly, the initial impact Jobs' exit has had on Apple's stock price has been largely negligible. On Thursday, immediately following the news, shares of AAPL closed down less than 1%.
Today begins Apple's first full week in the post-Jobs era. Looking ahead it will be interesting to see how newly-appointed CEO, Tim Cook handles the captain chair. This is not the first time Cook has been placed in charge, however. On the contrary, as I pointed out late last week, Jobs had turned to the former COO on a number of occasions over the past few years.
Almost no mutual fund managers have been able to protect Americans from losses in the stock market during this year's volatile trading.
By Frank Byrt, TheStreet
The mutual fund industry this year has been overrun by a stampede out of U.S. stocks and into safer alternatives, namely large-company and bond funds, much as in 2008 when the financial industry needed a bailout to survive.
Investors pulled $14.6 billion from U.S. equity mutual funds and put $102 billion into taxable bond funds through the end of July, said Ryan Leggio, a mutual fund analyst at Morningstar. The S&P 500 ($INX) is down 6.6% so far in 2011 after two years of gains and a slight rebound last week. The benchmark for American equities lost 16% of its value between July 22 and Aug. 19, the most in four weeks since March 2009, which turned out to be the bottom of the last stock-market crash.
"It's been a flight to bonds and away from equities," Leggio said.
Yes, Berkshire bailed out Bank of America last week, but not every ugly company deserves to be saved.
Do you think Warren Buffett was a Lone Ranger fan? It's likely, considering he rode that white horse to the rescue. Berkshire Hathaway (BRK.A) announced $5 billion investment in Bank of America puts him back in the role of hero last week. For the second time since the financial collapse of 2008, Buffett is bringing his substantial war chest of capital to the financial services industry under the auspices of providing confidence and support to the U.S. economy.
But don't think Buffett is out to save every ugly company out there. Here are 3 picks Warren Buffett wouldn't touch at ANY price.
Hurricane Irene looks tough enough, but the barrage of economic news next week could be even more of a problem for the market, given the trend of recent reports.
The markets' strength early in the week was in spite of more Eurozone concerns, as spreads widened on the Spanish and Italian credit-default swaps, and Greek bonds hit a new high in yield.
Even the US financial sector was under pressure, as rumors swirled about Bank of America (BAC). Even though it hit a low of $6.01 on Tuesday, the S&P 500 managed a 3.3% gain for the day.
The short-term technical picture improved further Wednesday, suggesting the S&P 500 could again move to the upper boundaries of its trading range. The rally was quashed Thursday in spite of Warren Buffett's $5 billion vote of confidence in Bank of America.
Bears have crushed several retail stocks - here is a trading story of a diamond in the rough
The market is clearly at a tipping point. With stocks in correction mode, investors are clearly concerned about a double dip recession. Wall Street economists have been cutting estimates for GDP growth over the last two months.
At the same time Wall Street analysts, those responsible for making forecasts of corporate profits have not yet adjusted downward. That disconnect creates plenty of opportunity to trade companies that are releasing earnings results. The real numbers will be given greater weight than Wall Street expectations.
In the last two weeks I have noticed a change in tone from those companies releasing result. While most companies are still beating analyst estimates the number of misses is on the rise. More importantly guidance for the future is noticeably weaker. There are stocks Warren Buffett will buy and stocks Buffett would not touch.
The price of oil has dropped already this summer, and could go even lower if Libya can restore significant production.
Wal-Mart, Home Depot and other big-box retailers go to great lengths to prepare for natural disasters.
Those big-box retailers have been in hurricane-anticipation mode for nearly a week, NPR reports. They're an important stop for worried residents seeking plywood, duct tape, bottled water and batteries.
And the last thing they want is empty shelves.
The company's newest intern is a Brown University student who told the world how to dismantle the smartphone's security restrictions.
Nicholas Allegra, 19, says he will start an internship at Apple in September. That's a bit of a surprise, considering that the Brown University student created the JailbreakMe code that lets people pull off the security restrictions Apple built into the iPhone.
And Allegra made it very easy to do. In fact, iPhone users just had to visit jailbreakme.com to automatically hack the device, opening up the phone to apps that were not authorized by Apple. Allegra was bold and brash and probably created some large headaches for a company that likes to keep tight control on all aspects of its products.
Thursday’s news-driven rally fizzled out, and with ominous bear flag patterns forming on the charts for several major stock indices, the short-term market action will be critical.
By Tom Aspray, MoneyShow.com
The close on Tuesday (August 23) suggested a short-term bottom was in place, which indicated that the major averages and ETFs should challenge or exceed last week’s highs. Wednesday’s higher close supported this view.
Stocks started off Thursday in a bullish mood following Warren Buffett’s investment in Bank of America (BAC), but the rally fizzled, which makes Friday’s action quite important.
If the financial media is correct in concluding that the market’s strength was based on today’s speech by Fed Chairman Ben Bernanke, it suggests that the market is really in weak hands. Though it is possible Bernanke will say something supportive for the markets, basing a trading or investing strategy on this hope is not really a strategy at all.
The primary concern now is that many of the key global markets show chart formations that are commonly referred to as “bear flags.” These are continuation patterns which are an interruption or pause in the overall trend. These will be confirmed by a break below Monday’s lows, which would signal another sharp market decline.
If the NY markets were forced to close because of hurricane Irene, and with overseas markets also weak, it could make any decline even worse.
HP shares tumble after a catastrophic conference call and Verizon's union strikes out in this week's round-up of business-world blunders.
By Greg Greenberg, TheStreet
Here is this week's round-up of the dumbest actions on Wall Street.
5. HP's catastrophic conference call
Shares of the once-proud technology giant took their biggest intraday shellacking in three decades last Friday, tumbling 20% after Apotheker issued forecasts that missed analysts' estimates and unveiled strategic changes that had Wall Street analysts scratching their heads. In a bid to boost margins, Apotheker laid out a series of major maneuvers, including jettisoning the company's personal computer business, closing its tablet and smartphone hardware unit and acquiring the enterprise software provider Autonomy Corp. for about $10.3 billion.
Despite high expectations, the Fed chief's speech was no repeat of last year's confidence-boosting performance. That's a shame.
The cliffhanger ended in disappointment. All eyes were on Federal Reserve Chairman Ben Bernanke's speech at the Jackson Hole symposium this morning for clues, hints and winks -- anything that might suggest the central bank was willing and able to support a newly weakened economy.
Many investors were hoping for another round of money printing like the $600 billion bond-buying program that was teased at Jackson Hole last year. But as I discussed in my column this week, something less was more likely.
Yet I still expected something to sooth raw nerves. Investors, executives and consumers are all feeling like something is not right. And their caution threatens to pull a still-growing economy into outright recession. Instead, we got nothing -- aside from a promise that the Fed will reconsider additional policy options at the end of September. So the question is: Now what?
His deal with Bank of America helps us avert bigger catastrophe.
Here’s my take. I heard this same sort of criticism when Prince Alaweed took the historic plunge and bought a huge chunk of Citigroup (C) the first time it imploded, in 1990-1991. People thought that the store had been given away. That the dilution was ridiculous.
The critics were ridiculous. He saved Citigroup.
Now, Bank of America wasn’t in as bad shape as Citigroup back then. But you have to understand that the pressure on this institution’s stock was eventually going to show up on the ratings agencies’ screens. We know that they downgrade when they see stocks plummet endlessly. We saw that time and again. Even when they shouldn’t.
Sell aggressive stocks and insurers now -- and jump into Home Depot.
By Jeff Reeves, Editor, InvestorPlace.com
Hurricane Irene is dominating the headlines this weekend, with the entire East Coast on high alert. The storm will strike North Carolina early Saturday morning and sweep all the way up to Maine if its current path holds, most likely roaring through New York, Boston, D.C. and Philadelphia.
Big storms like this create a big fear factor because residents in affected areas don't know what to expect. Will there be flooding? Lost power? Will it all blow over? It seems prudent to prepare for the worst and hope for the best.
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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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