Jim Cramer asks, why pay any attention to letters from a manager who lost money in the first quarter?
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These major market areas are likely to continue to underperform. Use careful risk controls to avoid big losing positions.
By Tom Aspray, MoneyShow.com
The late-in-session drop in the stock market after the Fed announcement was consistent with the deterioration in the technical outlook discussed yesterday. The McClellan Oscillator has broken below support, which makes a further drop very likely.
Three of the major sectors look most vulnerable to further selling and they are likely to underperform the S&P 500. Even though technology was also lower, it continues to show better relative performance, or RS analysis, which suggests the tech sector will hold above the August lows.
For the Select Sector SPDR - Energy (XLE), it is important to keep an eye on crude oil prices. As I have frequently pointed out, crude oil often leads the stock market on both the up and down side. November crude oil was down over $2 yesterday, and a break of key support would be a negative for the energy sector and stocks in general.
The Fed's latest maneuver may be bad for banks in the long term, but there are some defensive picks.
By Dan Freed, TheStreet
Wells Fargo (WFC), JPMorgan Chase (JPM), SunTrust Banks (STI) and City National Corp. (CYN) are the banks best positioned for a flatter U.S. Treasury yield curve now that the Federal Reserve has flattened it in a move dubbed Operation Twist, according to a research report published Wednesday by Evercore Partners.
There had been widespread speculation that the Fed would perform Operation Twist -- which aims to raise short-term interest rates while pushing down long-term rates -- before the Fed officially announced the plan Wednesday. The hope is that the move will attract foreign capital while keeping financing costs low, the Evercore report stated before the Fed made the move official.
Overall, Operation Twist would be bad for banks in the long term because it would negatively affect net interest margins, which represent the difference between banks' cost of capital and what they can charge borrowers.
The chance of a market bounce is diminishing, but high-yield stocks will start to attract more money from long-term bonds.
Did anyone get the license plate of that truck? I think it was a vanity plate. I think it had the word "significant" on it. Because that's the word that the Fed inserted before the term "downside risk," a word that didn't exist in the Aug. 9 statement that jumped at you this time around.
So we get one of those old-time sell-offs, one that takes down not only the companies that do poorly when there is significant risk -- you know, the usual suspects they shoot every day when things are said to be bad, such as rails, chemicals, papers, minerals -- but also the "recession-rich" stocks -- new term -- the ones that make you rich if there is a recession.
Yep, it was an S&P 500 ($INX) jailbreak. Everyone is, indeed, selling everything. Didn't we see this before? Except then we were in better shape to handle it.
The former eBay CEO was named chief of Hewlett-Packard Thursday afternoon. While she grew the auction site dramatically, cutting the fat at bloated HP will be a different challenge. Can she pull it off?
Can former eBay CEO Meg Whitman fix Hewlett-Packard?
HP's board named Whitman their new chief this afternoon, after two days of reports the move was imminent.
Hewlett-Packard (HPQ) shares soared as much as 10% Wednesday on rumors that the tech giant's board could be kicking chief executive Leo Apotheker to the curb, with Whitman waiting in the wings. Shares fell almost 5% on Thursday, a little worse than the market overall.
But don't be fooled -- this is just the latest dumb move at Hewlett-Packard, a company plagued not just by a revolving door in the corner office but by a glue-and-sticky-tape approach to its current ugly state of affairs.
Forget about Operation Twist. Next week's bond auction has the most potential to disrupt the markets.
Wish we were on a gold standard? Think again.
When you post any thoughts about gold, you're inevitably going to end up with some folks who bring up the currency issue. "Gold is a currency," they say. "Gold has been favored since the time T-Rex ruled supreme (the dinosaur, not the band)." And of course, "Gold is going up because our fiat money is being debased and rational people are doing the only thing that makes any sense by buying yellow metal."
One commenter, for instance, posited: "Gold is trading as a currency. Yes it could be somewhat overvalued today, and may fall back, but in 12 months it will be up against all fiat currencies that are clearly being devalued."
But here's the problem: If gold is acting like a currency, it's acting like a really, really bad one.
Amazon is finally making e-books for its Kindle reader available at libraries across the country.
Barnes & Noble (BKS) worked out a similar partnership for its Nook reader a long time ago, but Kindle users have been left out of the library loop. The deal won't immediately help Amazon's business, but it may eventually entice more people to buy the device if they can borrow books on it for free.
Here's how it works:
With Congress gridlocked, the central bank acts to keep the economic recovery on track.
The wait is over. Federal Reserve policymakers announced Wednesday that they are ready and willing to support the flagging economic recovery with another dose of monetary policy support.
Specifically, they will more directly target long-term interest rates by shifting the average maturity of the Fed's bond holdings by buying $400 billion worth of Treasury bonds with maturities over six years while selling an equal number of Treasury bills with maturities of three years or less. The move has been dubbed Operation Twist in honor of a similar action taken in the 1960s.
Essentially, they are taking money out of their left pocket and putting into the right, but the impact will still be positive, since it will push down the interest rates that price mortgage loans, car loans and other consumer credit.
Here's why the Fed did the right thing -- and what to expect next.
Solid reports from the software makers show companies are starting to spend more.
That's the takeaway after strong earnings reports this week from Oracle (ORCL) and Adobe (ADBE). The companies specialize in business software, and both said sales and profit are doing better than analysts expected.
Investors cheered the news, sending shares of both companies up Wednesday. Oracle's share price spiked nearly 8% to $30.52, and Adobe saw shares rise more than 3% to $25.49.
Growth-correlated industries like steel, coal and timber could be attractive to aggressive investors if the global economy rebounds.
By Don Dion, TheStreet
The tumultuous action of past few weeks has weighed heavily on investors of all risk tolerances. But while euro concerns and other macroeconomic issues will likely keep many from attempting to reenter the global marketplace, some may be ready to bet on strength.
If the developed market can get itself back on the healing path and emerging countries can return to strength, growth-correlated industries such as coal, steel and timber could be attractive destinations for aggressive investors.
With ETFs, it is possible to gain concentrated exposure to these market slices.
Amid several key warning signs, risk is high for new buying.
By Tom Aspray, MoneyShow.com
Stocks gave up their early gains on Tuesday, and the reversal was the most pronounced in the tech-heavy Nasdaq Composite.
The stock index futures are lower in early trading Wednesday, and the markets may be quiet going into the widely anticipated Federal Open Market Committee (FOMC) announcement.
Overseas markets were mostly lower, and the short-term technical studies do suggest that the rally has stalled.
With no one willing to lend to the biggest French banks, we'll remain in a bizarre standoff with them until we get some sort of government action.
Sure, Italian banks are really bad. Spanish banks? No, thanks. But it is these three French banks that the world seems to want to break. These three banks are the ones everyone is whispering, "Don't lend to."
These three -- which are pretty much like JPMorgan (JPM), Bank of America (BAC) and Wells Fargo (WFC) in terms of importance to France but feel more like Lehman, Bear and Countrywide (or Citigroup, Wachovia and Washington Mutual, name your poisoned bank) -- are holding us hostage right now.
They will keep holding us hostage until we get some sort of government action, because of their lack of transparency about what they own, how much they are lending against collateral (are they lending 40-1 against Greek bonds?) and how they are valuing sovereign bonds.
These are the biggest names in the streaming-video rumble, and they could start stealing Netflix customers soon.
Over the past few years, streaming video has been the hottest growth segment in entertainment -- and Netflix (NFLX) has been the undisputed champion. Shares went from $30 in early 2008 to more than $300 in July. Its total subscriber base topped 25 million at the peak.
But this summer, that massive growth hit a wall. Netflix announced it was effectively doubling subscription fees and spinning off its DVD rental business into a new subsidiary. Now it's lost 1 million subscribers during the past two months. Shares went from more than $300 to just $131. For the first time, it seems, there is blood in the streaming-video waters.
So who is ready to gobble up Netflix's market share and transform streaming into a competitive field?
Why is the most valuable company in the US so noticeably absent from the index?
But there's one glaring absence: Apple (AAPL). The most valuable company in the U.S. is missing from the list and probably won't be allowed into the club anytime soon.
Why? Because Apple's share price is too high.
With members quickly dropping the service and the stock taking a huge dive, CEO Reed Hastings tried to fix things with an apology. It's not working.
By Seth Jayson
Like many others, I took a shameful pleasure in watching Netflix (NFLX) CEO Reed Hastings' sad-yet-hilarious bungling of yet another major service change. Not satisfied with its recent, customer-alienating moves of jacking up prices 30% to 60% on long-time members -- and reaping a big drop in membership along with a huge fall in stock price -- Netflix had, Hastings said, finally decided to make amends.
The peace offering? A long-winded explanation that the price increase was actually part of an even bigger company initiative, one that will split the subscriber experience in two. Hastings explained that the disc business will abandon a decade's worth of branding to rename itself the horrible "Qwikster," while the smaller streaming catalog will keep the Netflix brand. Best of all, and worst of all, the service site would be split in two!
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[BRIEFING.COM] The stock market finished the Wednesday session on a modestly lower note, but it is worth mentioning today's retreat took place after six consecutive gains. The Dow Jones Industrial Average (-0.1%) and S&P 500 (-0.2%) settled not far below their flat lines, while the Nasdaq Composite (-0.8%) lagged throughout the session.
Equity indices started the day in the red, with the Nasdaq showing early weakness as large cap tech names and biotechnology weighed. The technology ... More
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