As the market wades through what many people hope is a sixth bull year, some have grown nervous about how long the run can go.
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Cut through all the headlines and determine the market direction for yourself
Each week end I step back and see where the market really is. It's very confusing to listen to the talking heads on all the financial news channels so I use these 2 indicators to keep my head straight. All of these indicators can be found on Barchart.
The first and I think the most important is the Value Line Arithmetic Index. It a simple unweighted index that measures the change of approximately 1700 of the largest stocks covered by the Value Line Investment Survey. These 1700 stocks constitute about 95% of the entire US stock market capitalization. Most investors I've talked to invest a percentage of their money in each stock rather than weighting their portfolio by market capitalization. This unweighted index of 1700 stocks gives me a better feel of the market than the weighted and much smaller Dow 30 or S&P 500.
My chart shows the index against its 20, 50 and 100 day moving average and uses the Barchart Trend Spotter (tm) which is an indicator of the weighted results of Barchart's 12 technical indicators.
The eyeglass maker is expanding globally and seeing double-digit profit and sales increases.
Increasing volume is helping AmBev's net sales grow, but the cost of raw materials and slowing growth in Brazil are new concerns.
Looking at the bright side of the week's news.
If you're feeling good about the market these days, you're not alone. Follow along as long-time Fool Rick Aristotle Munarriz takes us through some of this week's more uplifting headlines.
Rex Moore, Motley Fool Top Stocks Editor
1. The new tablet gestation period
Apple (AAPL) spoils its gadget owners with annual product line updates. When the world's most valuable tech company set up a media event in California for Wednesday, it was a safe bet that Steve Jobs -- yes, he was there -- would be unveiling the iPad 2.
He did, but Jobs didn't point to some early April date for the launch of Apple's latest "magical" tablet. Instead of matching last year's April launch of its trendsetting iPad, the beefed up iPad 2 will hit the market a week from today -- and at the same price point.
While investors are preoccupied with political turmoil in the Middle East and rising oil prices, an old problem festers.
If you were wondering what the next shoe to drop was, well here it is: The European Central Bank's "strong vigilance" against rising inflation will likely result in higher interest rates as soon as next month. I talked about that in my last blog post.
But here's the kicker: This will tighten the noose around Portugal, forcing that country to follow Greece and Ireland in accepting an EU-IMF bailout package. Also contributing is a failure by Europe's political leaders thus far to agree to an expansion of their sovereign rescue fund, the EFSF.
The mechanism for action will be higher bank funding costs via higher interest rates and higher loan losses as the eurozone struggles under the export-limiting influence of a stronger euro which is up nearly 16% against the dollar since January. A stronger currency, according to Capital Economist chief European economist Jonathan Loynes, is that "last thing the already uncompetitive peripheral economies would appear to need." And all of this will call into question the solvency of Spain -- a country so large that the eurozone's rescue fund may not be able to save it.
The former Federal Reserve chairman says gold prices are important to watch, and that people are underestimating corporate paper profits.
Earlier this week, we saw Warren Buffett pooh-pooh gold as an investment, saying he'd much rather own farmland or Exxon Mobil (XOM). But Greenspan seems to view gold as an important indicator of what's going on in the global economy, especially as central banks around the world jump into the gold rush.
"What the price of gold is saying is essentially that there are elements within the marketplace which feel very uncomfortable with respect to what's going on generally," the former Federal Reserve chairman said. "It's not an accident that you're finding that central banks are going in to buy gold."
Greenspan emphasized that he isn't calling for a return to the gold standard.
Here are three stocks the storied value investor is adding to his firm's portfolio.
By Jonas Elmerraji, Stockpickr
Ever since the SEC's 13F form, which requires institutional investment managers to disclose holdings, fell into public purview in the late 1970s, "standing on the shoulders of giants" has become a popular investment option. By seeing what the professionals are buying, individual investors can invest alongside them, even if their portfolios aren't big enough to catch the investment manager's attention.
In the value investing world, there are few giants as big as Legg Mason's Bill Miller. As the chairman and chief investment officer of Legg Mason Capital Management, Miller heads the firm's storied Value Trust (LMVTX), a mutual fund that stands near the top of the pack in long-term returns (even if more recent returns have been rocky).
With a renewed focus on finding diamonds in the rough of the equity market, it makes sense to pay attention to what Miller's LMCM is buying right now -- particularly new additions to the firm's portfolios.
The company's financial position improves on higher fourth-quarter profits, but the U.S. market is still a big weak spot.
Wal-Mart increases its dividend every year, but this year's boost is on the hefty side. The dividend grows to $1.46 from $1.21. The company will pay out 36.5 cents a share every quarter, in April, June, September and the following January. The stock was unchanged Friday on the news at $52.
The dividend increase follows other good news: Profits are up. The company notched a 27% increase in profit during the crucial fourth quarter, helped along by cost-cutting and international sales.
So finally, we're starting to see some positive movement here, but not all is well in Bentonville. All of Wal-Mart's growth now comes from overseas; in the United States, the retailer is struggling.
The tech retailer may face hurdles gaining approval for a store in New York City's historic Grand Central Terminal.
By Olivia Oran, TheStreet
Rumors are circulating that Apple (AAPL) may launch its biggest retail store in New York City's Grand Central Terminal. If true, the move into one of the city's most historical fixtures could draw the iPhone maker into a complicated and cumbersome approval process.
The Cupertino, Calif. consumer electronics maker is aiming to make the transportation hub home to its biggest retail location, according to reports. Apple's largest store today is its 16,300 square feet spot in London's Covent Garden.
Apple could not be reached for comment about its retail expansion plans.
This week's dumbest business moves include Gupta's insider trading case, Weatherford's big accounting error and Consumer Reports' Chevy Volt slight.
By TheStreet Staff, TheStreet
Here is this week's roundup of the dumbest actions on Wall Street.
5. Gupta trips on tips
Typically insider trading cases involve lower level Wall Street soldiers that stumble into information that they realize can net them a quick pay day. They are also quickly caught, since the usually call their family broker to buy millions of shares of a no name stock just before it skyrockets.
There's enough reserve capacity to offset any major supply disruptions, and OPEC's lack of urgency may be the single biggest sign that the crisis may soon pass.
Where's the emergency OPEC meeting? Where's the meeting of the producing countries that will set everything right and bring down the oil prices to levels that are not boom-or-bust like the last time in 2008, when the price of oil was cut in half just a few months after hitting $147? Why is the organization waiting until its regularly scheduled June meeting to talk about this emergency?
Because, believe it or not, there is no emergency. OPEC's calm because the Saudis have more than enough spare capacity -- double what it had three years ago during the last shock. That's right, double, according to JPMorgan's just-released The Eye of the Market bulletin, the most cogent piece of research to hit my desk each week.
Plus there are more than 4 billion barrels of spare capacity in strategic petroleum reserves worldwide, including in the United States. That oil can and should be released if things get out of control. In fact, the U.S. should be unleashing it now to offset the inflation it causes rather than raising rates which could break the entire economy ... in large part because of oil prices.
The wait is over. After years of ultra-cheap money, short term interest rates are set to rise as central banks bring the fight to inflation. That's damaging the dollar and sending investors back into emerging market stocks.
For months, I've been warning of the risks of inflation and higher interest rates and how money is about to get more expensive. Be sure to check out my Jan. 19 column, "Our next economic worry: Inflation."
Now, with the situation in North Africa and the Middle East focusing attention on fast rising food and fuel prices, and signs that these pressures are feeding into so-called "core" measures of inflation, central banks are preparing to take action. The European Central Bank looks ready to move first. And it could move as soon as next month according to Capital Economics chief European economist Jonathan Loynes.
A plethora of emerging market economies including China, Brazil, and Indonesia have been on the rate hike campaign for awhile. But this makes the beginning of the tightening cycle for the major developed economies. And as the world's main sources of capital, that has far reaching implications for the global economy, the housing market, the financial markets, and consumer confidence.
After a 25% haircut, it's time to take a close look at this energy saver.
The "demand response" industry is growing fast because it offers a win-win-win proposition for customers, utilities, and the companies providing the service. Fool analyst Dan Dzombak is buying EnerNOC, which he says has suffered an unfair beat-down.
Rex Moore, Motley Fool Top Stocks Editor
EnerNOC (ENOC) is one of the market leaders of the demand response industry (along with Comverge (COMV)). Basically, EnerNOC uses technology to monitor, reduce, and coordinate its customers' (large factories, department stores, warehouses, malls, etc.) electricity usage. During times of high electricity demand, EnerNOC can then reduce its customers' power usage, which saves utilities from having to power up extra plants at high costs. For doing this, EnerNOC gets paid by utility companies and grid operators for freeing up electricity. EnerNOC passes along a portion of that cash to its customers, a win for both customers and utilities.
These small stocks might be risky, but the potential rewards are big.
By James Dlugosch, Stockpickr
I love small-cap stocks, in particular those that trade for less than $5 a share. In my long history of publishing stock recommendations, I can honestly say that the biggest money made over the years came from stocks that were trading for less than $5. While I’ve had many large-cap winners, the dollars made were not the same.
To be fair, it is also true that some of the biggest losers also were smaller stocks. They are certainly risky, but given the potential reward, the risk can be worth it.
A good friend of mine who has been a subscriber of many of my prior publications used to hound me for my top picks under $5. He liked the idea that I could recommend Apple (AAPL), but he didn't want to hear about it. He wanted the small stock that nobody else was talking about.
By virtue of its success, Apple can be a lightning rod for critics. But the best-run company with the best products doesn't need to follow the same rules as everyone else.
The caller was angry. He wanted to know how Apple(AAPL) could sit on that $60 billion cash war chest and not return that to shareholders. He wanted to know why Apple hasn't split the stock. He wanted to know why these injustices occur.
I thought about it for a moment, knowing that I favor dividends and returning capital to the shareholders. I don't have much of a love for splits, but I know -- rightly or wrongly -- that such an event would attract a lot of new buyers to the stock.
But then I just let loose. When you perform as well as Apple does; when you invent a whole new ecosystem; when you are the world's best engineering, designing, manufacturing and retailing name; when you have changed as many games as they have and when you have made as much money for shareholders as they have, then you know what? You don't have to play by the rules that others do.
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[BRIEFING.COM] Equity indices strung together a daylong rally on Tuesday, giving the S&P 500 its sixth consecutive advance. Some selling during the final hour of action pressured the indices from their highs, but they still ended with the bulk of their gains. The benchmark index added 0.4% with eight sectors finishing in the green, while the Nasdaq (+1.0%) outperformed throughout the session.
Although the stock market began the day on a flat note, the major averages quickly took the ... More
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