5 reasons the market is seeing red
5 reasons the market is seeing red

Geopolitical crises are taking a toll on stocks as we head into the seasonally weak month of August.

VIDEO ON MSN MONEY

Investors should monitor the impact the Nasdaq's rebalancing will have on PowerShares QQQ. With video.

By TheStreet Staff May 2, 2011 10:09AM

By Don Dion, TheStreet

 

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

 

1. PowerShares QQQ (QQQ)

 

Investors holding QQQ will want to stay vigilant at the start of the week when the Nasdaq ($COMPX)’s well-documented and anxiously awaited rebalance goes into effect.

 

A number of companies including Google (GOOG), Oracle (ORCL) and Microsoft (MSFT) will see their weightings change.

 

The firm, however, that most investors will likely have their eyes on will be Apple (AAPL). After the rebalance, the tech goliath will remain the index's largest component. However, its weighting will be dropped by 8 percentage points to 12.5%.

 

Company executives bowed for several seconds Sunday to apologize, saying they will make amends.

By Kim Peterson May 2, 2011 10:03AM
Ten million credit card numbers. That's an enormous security breach that Sony (SNE) is trying to recover from this week.

The company said hackers stole the names, addresses and birth dates of account holders in its online gaming, movie and music services, The Wall Street Journal reported. We don't know for sure whether the hackers got credit card numbers as well. Sony said it can't rule out the possibility that 10 million customers may have had their card information compromised -- but it knows the hackers didn't get the security codes for those cards.

Post continues after this video about Sony's cyberattack: 

The company's business seems to be growing faster than expected, putting it on course for a $100 billion valuation.

By Kim Peterson May 2, 2011 10:02AM
Facebook's business is on fire, and people who have seen the company's financial information say an initial public offering could take place next spring, The Wall Street Journal reported.

This year, Facebook could rake in $2 billion in earnings before taking out interest, taxes, depreciation and amortization, sources tell the Journal. And the way that profit is going, the company could be valued at at least $100 billion when it goes public.

That's more than Amazon's (AMZN) current valuation of $88.5 billion and three times the size of phone giant Nokia (NOK).

Take this information with a grain of salt, however. 

Big gains over the past 2 weeks call for conservative picks this week.

By Jamie Dlugosch May 2, 2011 9:42AM

It was another gangbuster week for stocks. The S&P 500 powered to multi-year highs with a gain of nearly 2% for the week. Pushing stocks higher were strong earnings results and strong leadership from the Federal Reserve.

 

Speaking to reporters in an effort of greater transparency the Fed Chairman confirmed that QE 2 was winding down. More importantly interest rates were set to be held low for the foreseeable future.

 

The central bank wants risk taking and the markets are obliging. Interest rates are on the rise as bond holders sell positions. Cash then rotates to equity markets hence the nice gains in stocks of late.

 

It is not sustainable in my opinion. As May begins, look for stocks to take a breather as investors sell in May and go away. I’m quite happy to take a more neutral position with my ETF trades for this week.

 

Leading the way will be the ProShares Short Russell 2,000 (RWM).

 
Tags: etf

The death of the terrorist mastermind is a plus for the US and the world, while China's manufacturing slowdown means good things for stocks.

By Jim Cramer May 2, 2011 9:06AM

jim cramerthe streetThe short term is different from the real short term, which is different from the real real short term. The short term is also different from the near term and the long term. All have been on display in the last 12 hours.

 

That's how I look at this Osama bin Laden news. As you may have seen, when the special press conference story was about to happen last night, the S&P 500 ($INX) futures were up a couple of points. The extreme mystery of the "national security event," which is all we knew at 10:30 p.m. ET, didn't budge them down -- and that was pretty accurate, somehow, given that you had to believe the news could have been bad or good.

 

Then those futures flew up a quick 9 the moment the real news broke but before the speech occurred, and they landed at 11 points up. That's the real short-term impact, the anticipation of a euphoria rally driven by retail investors entering the market with a feel-good vengeance.  

 

The market is likely to remain climbing into May...but if you're just getting into stocks, this is no time to jump in with both feet.

By MoneyShow.com Apr 30, 2011 10:45AM
By Tom Aspray, MoneyShow.com

The markets seemed to breathe a sigh of relief after Ben Bernanke's widely anticipated press conference.

His comments seemed to calm the inflation fears for now—and surprisingly, a preliminary survey from the University of Michigan showed that expectations are for a 2.9% CPI for the next five years. Over the next year, a jump in inflation is expected.

The silver market dominated the news last week, as many are trying to pick a top. Though silver is likely to see a 10% to 20% decline in the next few months, trying to pick a top in any commodity market—as most experienced traders will tell you—is very hazardous to your economic health. Exemplifying this, those who sold gold were squeezed Friday, as it closed up $32 per ounce.

This week's gain in the stock market reinforced the positive intermediate term as the NYSE Composite A/D line made further new highs. However, in my view the bullish camp is starting to get a bit crowded. As I discussed Friday, there are also some early warning signs appearing that suggest a more defensive strategy is warranted as the market moves higher.
 
Tags: gold

At this value price, it's worth taking a shot at future growth.

By Motley Fool Pick of the Day Apr 29, 2011 2:32PM

By Anand Chokkavelu, CFA 

 

I love getting a growth story at a value price. Unfortunately, that's a very hard thing to find.

 

Today, I may have one for you in self-study foreign language software maker Rosetta Stone (RST) -- a company that is going through some tough times, but is selling for a value price.

 

Squeezing water from a Stone
In April 2009, during the darkest days of the stock market, Rosetta Stone IPO'd to a surprisingly warm reception. Its shares were priced at $18 (already above estimates) and went up from there, topping $30 a share.

 

But while the rest of the market has rallied mightily, Rosetta Stone has dipped below its IPO price and now sits below $14 a share.

 

The aerospace company wants to boost commercial jet production by 40%, which explains why shares are trading near a 3-year high.

By TheStreet Staff Apr 29, 2011 12:47PM

Image: Airplane (© Christie & Cole/Corbis)By Ted Reed, TheStreet

 

Perhaps the most telling comment by Boeing (BA) CEO Jim McNerney during the company's earnings call Wednesday was his promise to "increase our commercial airplane output by more than 40% during the next three years."

 

With the world hungry for modern, fuel-efficient large jets, which are available from just two manufacturers, it is no wonder that Boeing is trading close to its three-year high --- and that many analysts see it going even higher.

 

At midday Friday, shares were up $1.43 to $79.98 as investors seemed to shrug off reports that Boeing is not a finalist for a contract to supply 126 fighter jets to the Indian Air Force. For the year, shares in Boeing, a Dow component, are up 20%. That includes a 10% increase since April 14.

 

Sentiment is up, and the markets may continue rising in the short term. But investors must still be prepared to identify the signs of a correction and act quickly.

By MoneyShow.com Apr 29, 2011 12:19PM
By Tom Aspray, MoneyShow.com

Since mid-March, there have been two distinct cases of what I called panic selling, as those who sold on the news quickly regretted their decision. 

Now that Ben Bernanke appears to have calmed investors, there are some early signs that we could be approaching a period of buying panic.

While the market internals for the broad market, such as the Advance/Decline (A/D) line, are still confirming the higher prices, some market sectors are starting to diverge on a short-term basis. These divergences could be resolved in just a few days of trading, however, and the major trend for the stock market remains positive.

Nevertheless, as we continue to move higher over the next few weeks and the major averages reach my next major price targets, investors would be prudent to adjust their strategies accordingly.

Typically, extremes in sentiment, both bullish and bearish, can build over several weeks, as was the case last summer when the number of bullish newsletter writers dropped below 30% by the end of August.

That number is now likely closer to 60%, and it sends a signal that investors should adopt a more risk-averse buying strategy: take some profits on longs when prices are moving higher, and be sure that protective stops are adjusted as prices move up.
 

Apple fixes problems that don't exist. Fed Chairman Ben Bernanke gives first press conference. Sony gets hacked.

By TheStreet Staff Apr 29, 2011 11:44AM

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

 

5. Apple: There's no problem, but we fixed it

 

Apple (AAPL) is getting really good at fixing things it says aren't a problem.

 

This week, the company denied, confessed to and then said it will change its iPhone tracking practices that have created an outcry about potential privacy invasion.

 

These funds allow regular folks to hedge against high gas prices. With video on oil company earnings.

By InvestorPlace Apr 29, 2011 10:53AM
By Jeff Reeves, editor of InvestorPlace.com

Big Oil is back. With persistently high crude prices, it would be nearly impossible not to make huge profits. The standout this week was Exxon Mobil (XOM). Its earnings surged by 69% to $10.7 billion. But the entire industry is on the rise, with even the beleaguered BP (BP) posting a profit of $5.48 billion, thanks to expensive oil.

 

As should be no surprise, investors have been pouring money into the oil majors and other related energy companies. It's been a red-hot trade. But if you have been watching prices at the pump more than the stock market, you probably don't have time for analyzing and picking stocks.


To help you out, here are three funds that take the guesswork out of oil investing by spreading your money across a variety of important businesses in the sector:

 

David Sokol's stock purchases will take center stage at Berkshire Hathaway's shareholders meeting.

By TheStreet Staff Apr 29, 2011 10:17AM

By Don Dion, TheStreet

 

Droves of investors and fans of Warren Buffett will flood the Qwest Center in Omaha, Neb., this weekend in order to take part in Berkshire Hathaway's (BRK.A) annual shareholders meeting. The event, widely considered the "Woodstock for Capitalists," is always hotly anticipated and closely watched.

 

The theme of this year's meeting will be "Planes, Trains, and Automobiles." As Buffett noted in his annual letter to Berkshire shareholders, companies including NetJets, Burlington Northern Santa Fe Railroad and BYD will be spotlighted.

 

Kinder Morgan Energy remains the safest play on domestic fuel shipping, and it stands to gain more if Washington wakes up to the abundance of natural gas in this country.

By Jim Cramer Apr 29, 2011 9:20AM

jim cramerthe streetWe have tons of oil in this country, we just don't have the ability to bring it to the markets. That's the succinct analysis we got last night from Rich Kinder, the chairman and CEO of Kinder Morgan Energy Partners (KMP), and the man I think knows more about the business of energy than anyone in the United States.

 

If you have energy somewhere, whether it is in the form of coal or ethane or natural gas liquids or oil, chances are you have to contact Kinder to move it to where it has to go. The fact that West Texas crude is absurdly priced versus all other crude has to do with the high cost of getting the darned stuff out of there. Kinder's company is working as fast as it can to get a pipeline going to allow the oil in Cushing, Okla., to reach the markets so the selling discount is eliminated.

 

When we hit the largest discovery of oil in the last 40 years in the Bakken Shale in North Dakota we, again, developed a bottleneck. Kinder can't get pipe up there but he's investing in rail to reach those hard-to-get-at fields to make sure oil that can be pumped at $112 a barrel will be pumped. And there's a lot of it there.

 

The move is just the latest sign that executives are returning to the company's roots after recent failed efforts to appear more upscale.

By InvestorPlace Apr 29, 2011 9:19AM

Omage: Men playing with guns (©Leander Baerenz/Getty Images)By Jeff Reeves, editor of InvestorPlace.com


Wal-Mart (WMT) may be the world's biggest retailer, but that doesn't mean it has given up on growing. From planned grocery deliveries to inner-city residents to its recent purchase of a social-media company, there always seems to be something new in store.


The latest news, according to The Wall Street Journal, is that Wal-Mart will reload gun sales by cutting back on electronics floor space to make room for rifles, shotguns and ammunition at hundreds of U.S. stores.


But unlike previous failed efforts and some recent quirky initiatives, the return of guns and ammo is a return to Wal-Mart's roots -- something the company may sorely need.

 

Some prized growing regions of Brazil could be hit with cold weather from the South Pole.

By Kim Peterson Apr 29, 2011 6:59AM
Image: Coffee (© HD Connelly/Getty Images/Getty Images)The prices of Folgers and Maxwell House coffees have already been creeping up, but now the companies face a possible 40% spike in bean costs as Brazil deals with hail and possible frost, Bloomberg reports.

The industry has seen Brazilian frost wreak havoc on prices before. In 1994, a frost damaged coffee crops and prices rose 39%. If the same thing happens this year, coffee could hit a record $4.20 a pound, according to Bloomberg. And if coffee is that high at the wholesale level, just imagine what it will cost on store shelves.

As if that weren't bad enough, there's already a shortage this year of Arabica beans, causing prices to increase 24%. "If Brazil has a frost, not only will we see uncharted prices but the situation might become unbearable," industry analyst Rodrigo Costa told Bloomberg. 

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[BRIEFING.COM] The stock market finished a down week on a cautious note with small caps leading the retreat. The Russell 2000 lost 0.5%, widening its weekly decline to 2.6%, while the S&P 500 shed 0.3%. The benchmark index ended the week lower by 2.7%.

This morning, the market was provided a basis to rebound with the July employment report, which was just right for the policy doves (209K versus Briefing.com consensus 220K). It showed payroll growth that was weaker than expected, ... More


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