You can still find small-cap superstars
Small-cap superstars still abound

There are some picks in this sector that have excellent valuations and strong earnings growth.

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With nearly 70% of trades being done by machines, do individual investors stand a chance?

By Kim Peterson Jun 8, 2011 1:47PM
Think the market is rigged? Watch the "60 Minutes" segment airing Sunday about high-speed trading and you'll wonder about the point of trading stocks at all.

Supercomputers control nearly 70% of the trades on Wall Street these days, Steve Kroft reports. They monitor all the data they can about the market and get in and out of a stock within seconds.

The computers don't care about companies or their quarterly earnings. They don't care what analysts say or how strong the dollar or the economy might be. They're completely focused on one thing: buying low and selling high.

Computers can see the buy and sell orders coming into the exchanges before anyone else. And they respond based on what those orders tell them: Jump in before a stock starts to rally. Sell before a stock heads into a decline. The fastest computers get the best results. 

This fund's 4 largest holders support the metal's price by buying the physical commodity when prices fall.

By TheStreet Staff Jun 8, 2011 12:56PM

Image: Silver Bars (© Corbis)By Dan Dicker, TheStreet

 

Silver and BlackRock's silver ETF, iShares Silver Trust ETF (SLV), have been the target of some wild rumors in the past several months.

 

The crazy stories have run the gamut around the financial blogosphere. One has JPMorgan (JPM) as a puppet of the Federal Reserve, establishing a huge proprietary bet against silver designed to pressure the dollar and reduce costs of monetary easing. Others have BlackRock (BLK) unable to satisfy its share demand with real silver stockpiles. Many observers claim that legitimate storage for the metal doesn't come anywhere near the almost 11,400 tons of physical silver that the trust reported holding at its extremes in late April of this year.

 

I don't need to go anywhere near those rumors. The facts about SLV alone are enough to make a great case for the manipulating effects of the ETF on the price of silver and the strong positives those manipulations can deliver to an investor who doesn't mind being part of a grand plan -- as long as it's a profitable one.

 

The nation's stock market has been among the world's top performers. If you're looking for strong technicals, good value and high yield, consider these 4 plays.

By MoneyShow.com Jun 8, 2011 11:50AM
By Tom Aspray, MoneyShow.com

Last night's state dinner for German Chancellor Angela Merkel was reported as being low key and followed the presentation to Merkel of the Presidential Medal of Freedom. Germany could have also received an honor for being one of the best-performing stock markets over the past three months.

Since the March 16 lows, the iShares MSCI Germany Index Fund (EWG) is up 16.15% versus just 2.9% for the Spyder Trust (SPY), which tracks the S&P 500. The euro has been strong during the period, up 6.7% versus a 1.7% decline in the US dollar index.

At home, Merkel is under fire for not taking a leading role in Greece's debt problems, and currently there are no Germans on any of the global monetary or economic organizations.

Clearly, investors like what is going on in Germany, and several of the leading German ADRs have quite positive long-term charts. One yields more than 7% and is trading more than 15% below book value.
 

Can we do better than the S&P 500?

By Motley Fool Pick of the Day Jun 8, 2011 11:44AM

Image: Index funds (© ThinkStock/SuperStock)By Morgan Housel

 

Investors own index funds for a simple reason: They don't want to pick individual stocks. They'd rather hold a broad basket that doesn't give preference to any one company.

 

For those who don't have the time or inclination to dive into individual stocks, index funds are the way to go. Warren Buffett even said as much many years ago: "Most investors . . . will find that the best way to own common stocks is through an index fund that charges minimal fees. Those following this path are sure to beat the net results . . . delivered by the great majority of investment professionals."

 

Some might be surprised to learn, however, that most index funds aren't as passive as they might think.

 

The most popular index, the S&P 500, consists of (redundantly) 500 large- and mid-cap stocks from dozens of different industries.

 

The automakers' prospects are brightening, but one stock is a better pick. With video.

By TheStreet Staff Jun 8, 2011 11:01AM

Image: Car side mirror (© Adam Gault / Digital Vision/Getty Images)By Jake Lynch, TheStreet

 

Prospects for GM (GM) and Ford (F) are improving almost daily. Wednesday, Ford chief executive officer Alan Mulally made the bold prediction that sales will rise 50% in four years as Africa and Asia demand strengthens. Ford, which sold 5.3 million vehicles in fiscal 2010, will shoot for "nearly 8 million" by 2015. Is that reasonable?

 

While Ford's China sales jumped 15% in May, GM has a stronger foothold in the region, recently debuting a China-exclusive brand, Baojun. Although both GM's and Ford's shares are attractive, GM is looking cheaper in light of the recent sell-off in equities.

 

As QE2, the Fed's record bond-buying program, ends, many investors are predicting a down-leg in stocks. If that projection proves prescient, GM's stock will deserve consideration from long-term investors. Although down 22% this year, GM's outstanding assets and growth prospects are undervalued by the market.

 

These funds might benefit from what's being called a golden age for the fuel.

By TheStreet Staff Jun 8, 2011 10:58AM

Image: Natural gas (© Ron Chapple/Jupiterimages)By Don Dion, TheStreet

 

Though wildly popular, the natural-gas industry has been notoriously tricky to target from an investment perspective. Fans of the fuel, however, were given a welcome vote of confidence this week when the Energy Information Administration released a shining forecast for the industry.

 

On Monday, the agency reported that a combination of factors, including abundant supplies, soured sentiment toward nuclear energy, and rising demand from emerging markets, have set the stage for what could prove to be a golden age for natural gas.

 

Looking to the next quarter century, the EIA forecasts that natural gas use could jump by as much as 50%. By 2030, the group notes that demand for natural gas could surpass that of coal.

 

Unlike Tuesday's sucker punch, a real rally must be based on lower stock prices and positive changes.

By Jim Cramer Jun 8, 2011 9:29AM

the streetjim cramerYou have to step back and look at Tuesday's action to know how the market has changed from being hospitable to being treacherous.

 

From the beginning of the day, stocks looked downright terrific. The euro was strong, and oil was moderating while copper hung in. Translation: The U.S. got the benefit of a weaker currency for export, while oil bucked the rally because OPEC was going to supply more crude. And copper showed us that the weakness in crude wasn't economically related but more about oversupply.

 

The trinity that has mattered kicked in.

 

But by the end of the day, while the dollar stayed weak and copper hung in, oil reversed, not budging, and $3.50 gasoline -- what we need to get this economy on a slightly better keel -- remained elusive. The dollar-euro relationship that had been good for stocks for most of the year failed to spur hedge fund buying, and traders who came in during the morning were left holding the bag.

 

The price-to-earnings ratio could be cheap or just right. It all depends on your time frame.

By Jim J. Jubak Jun 7, 2011 5:56PM
Jim JubakBank stocks look cheap on a historical basis. Unless, of course, revenue and earnings growth have ground to a halt in the sector.

That, unfortunately, is exactly what happened last quarter, as loan demand grew not at all at most banks, and earnings improvements came pretty much solely from the reduction of reserves against bad loans. And that's an increasingly consensus view of what banks will report for the second quarter as well.

I think we’re seeing a shift in investor attitudes -- from optimism about improving earnings, based on the bank reserves, to dismay at a lack of revenue and earnings growth from traditional bank businesses.

Partly that’s the result of reports that show a slowing in the U.S. economy -- bank revenues would be hit by any slowing in economic activity. And partly it’s a worry about changes to US and international banking regulations, which:
 

In other countries, courts are becoming more accepting about using Facebook to send notices to people who can't otherwise be found.

By Kim Peterson Jun 7, 2011 3:19PM
You can find out a lot about perfect strangers on Facebook. And some lawyers and courts are starting to take advantage of that.

Legal cases grind to a halt when people can't be found to get served with court notices, Bloomberg reports. But sometimes when they can't be found in person, they can be tracked down on Facebook.

Courts in New Zealand, Canada and other countries are becoming increasingly comfortable with serving papers over Facebook. In Australia, one lawyer used the website to serve a foreclosure notice to one couple who defaulted on their loan. So far, we haven't seen Facebook used to serve papers in the U.S. 

The new console features a breakthrough touch-screen controller. Will it reverse a long sales slump?

By Kim Peterson Jun 7, 2011 2:49PM
Nintendo (NTDOY) revolutionized the video-game business with the Wii. And next year, it's hoping to repeat that success with the Wii U.

The company unveiled its new system this week at the Electronics Entertainment Expo. Even in its early stages, one look at the Wii U shows that Nintendo is making a big bet.

The biggest difference with the Wii U is its wireless controller, which looks like a mini tablet computer with its own touch screen. It still has all the buttons and control sticks you'd expect, but in the middle is a color screen that can show a map, your health level, really any add-ons that enhance a game.

Check out the Wii U in the following video interview.

Post continues after video:
 

Some traders feel so scarred by the financial downturn that they're staying far away from the stock market.

By Kim Peterson Jun 7, 2011 1:46PM
Some U.S. investors were so burned in the financial crisis that they've given up stocks completely.

In a new study by Prudential Financial (PRU), 58% of investors say they've lost faith altogether in the stock market. The risks aren't worth it, some say. And 44% swear they're done with stocks for good and are not likely to put any more money into the market.

The study, which polled 1,274 Americans last winter, also suggested some fundamental changes in the way people think about saving for retirement. Nearly three out of four respondents said they need to think differently about retirement planning.

That makes sense, given how the financial crisis and recession destroyed two key notions about retirement saving. People who had hoped to rely on home equity watched the real-estate market implode. Others who thought they could depend on growth and income stocks saw intense fear and volatility as the market teetered. 

A proven technical tool indicates widespread recent selling has driven many shares to levels where good buying opportunities may emerge soon.

By MoneyShow.com Jun 7, 2011 11:28AM
By Tom Aspray, MoneyShow.com

The selling continued Monday, with all the major averages closing lower. The Dow industrials held up the best, losing only 0.5%, while the S&P 500 was down 1.08% and the KBW Bank Index was down by more than 2%.

The market internals were solidly negative, with declining stocks swamping advancing issues by almost 4 to 1. The number of stocks making new lows also picked up, but it is still well below the levels seen last summer.

The McClellan Oscillator has dropped to minus 177, which is getting oversold, although it hit a low of minus 268 in March.

There are many ways to gauge whether an individual stock is overbought or oversold. Last week's article Gain an Edge with Volatility Analysis prompted quite a bit of interest in the Starc bands, so I want to look at the stocks in the Dow to find those that are the most oversold in terms of their weekly and daily Starc bands.
 

Rough global markets led to $770 million in net outflows last month.

By TheStreet Staff Jun 7, 2011 11:22AM

Image: ETF investor (© Tom Grill/Corbis)By Don Dion, TheStreet

 

The National Stock Exchange's new report on ETF flow data for May provides a wealth of information on investor preferences.

 

Overall, May was a trying month for investors. As the global marketplace ran into turmoil, investor interest in exchange-traded funds waned. For the first time in 2011, the industry saw net outflows. The $777 million in net outflows marked a dramatic shift from April, when there were $20 billion in inflows.

 

Industry leaders including State Street (STT), PowerShares, and BlackRock (BLK) witnessed the most staggering outflows, totaling $5.98 billion, $2.16 billion and $1.95 billion respectively. Smaller fund providers such as ETF Securities and Guggenheim ran into notable headwinds as well.

 

Some believe halcyon days will return after a few more deals.

By Motley Fool Pick of the Day Jun 7, 2011 10:55AM

By Tim Hanson

 

The past couple of years have been a fascinating and volatile time to be investing in Chinese stocks, but the past couple of weeks have shown definitively the challenges and opportunities in the sector. On the challenges side, there's the now well-known story of Longtop Financial (LFT), a Chinese financial software company that was once valued at more than $2 billion and owned by several high-profile investors. It said that its Big Four auditor, Deloitte, and its CFO were both resigning and that the Securities and Exchange Commission was beginning a probe into the company's accounting. This revelation comes after several short-sellers publicly called the company's numbers into question -- and were right.

 

Longtop is likely headed for delisting, a plight that has befallen several other Chinese companies that were revealed as alleged frauds thanks to sound short-side research.

 

It's not all bad
On the flip side, there was the announcement from China Fire & Security (CFSG) that it would be acquired by Bain Capital Partners, a reputable firm no doubt, for $9 per share -- a better than 20% premium to where the stock had been trading.

 

I hate being part of the consensus, but right now the view that the market will go flat before finding a bottom seems like the most realistic one.

By Jim Cramer Jun 7, 2011 10:24AM

the streetthe streetSometimes you have to own the fact that it's right to be grim about what is happening. I have long held that we need employment growth to sustain this remarkable rally that began in March of 2009. We aren't getting it.

 

I have long held that the government had levers to raise employment: easy policies by the Fed and stimulus by Congress. Those are over or about to end.

 

I thought leadership by the president could help create jobs, as we have seen with other presidents, notably Bill Clinton. That's been a definitive failure.

 

Four-dollar gasoline, the break point for 2008's economy, hasn't helped. The difference, of course, is that we are awash in oil, even before the OPEC meeting.

 

But the government seems unsophisticated, not seeing that oil has become like stocks, a necessary portfolio allocation, with the big difference that it's a small market prone to easy manipulation. We know that now from the Commodity Futures Trading Commission's discovery that a couple of tiny hedge fund managers and a shipper were able to keep oil from coming to the market in 2008.

 

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[BRIEFING.COM] Equity indices closed out the month of August on a modestly higher note. The Russell 2000 (+0.6%) and Nasdaq Composite (+0.5%) finished ahead of the S&P 500 (+0.3%), which extended its August gain to 3.8%. Blue chips lagged with the Dow Jones Industrial Average (+0.1%) spending the bulk of the session in the red.

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