Why stocks are in for a rough ride this week
Stocks in for a rough ride this week

Longtime market bull Jeremy Siegel says investors could realize the market is behind the curve on interest rates.

VIDEO ON MSN MONEY

Let's try to make some money in a market likely to move lower.

By Jamie Dlugosch Mar 14, 2011 9:41AM

The absolute-return approach is perfect for this sort of market. Stocks are having trouble gaining momentum and are susceptible to declines, as was the case last week.

 

I’ve spent a lot of time analyzing individual companies over the past few weeks. What I found should be troubling for any bull: Most stocks are fully priced or overpriced, based on fundamental valuation metrics.

 

Forget about the headline causes for stocks to sell off. We are going lower because most stocks have gotten a bit ahead of themselves from and earnings standpoint. The negative headlines only add downward pressure.

 

In such an environment, a balance of longs and shorts is the appropriate course of action for any ETF trader. I’m increasing my exposure to the short side of the market with the inclusion of the ProShares Ultra Short Technology ETF (REW).

 
Tags: etf

The disaster in Japan likely means the end of nuclear energy, in the US and abroad, and a greater reliance on natural gas.

By Jim Cramer Mar 14, 2011 8:58AM

jim cramerthestreetWith the nuclear-powered reactors in Japan still smoldering, it's not easy to know what to do. It is easier to pretend to know what to do or to take a blind stab. Or just to cash out. As easy as it was 25 years ago when Chernobyl exploded.

 

When that happened, the world panicked. All sorts of disaster scenarios existed, in part because of the amazing lack of information coming out of the Soviet Union and the radically escalated levels of radiation showing up in Sweden, which triggered the first word of the accident.

 

The lack of knowledge directly affected subsequent trading. Food and restaurant stocks were hit especially hard because people thought Chernobyl was uncontainable and no one would be able to eat anything but canned food until the radiation cloud dispersed. Yes, it was that scary.

 

This time around we know more about the event, but, again, because of radiation fears and the ongoing nature of the tragedy, snap judgments will be as wrong as they were back then. In 1986, I tried to keep calm, but my investors didn't and many went into cash.

 

Spain's economic growth is on the rise, and the debt markets have decided to give the country a pass.

By Jim J. Jubak Mar 11, 2011 4:49PM
Jim JubakThe debt markets are saying that Spain will make it through the euro crisis without a bailout or a default.

What? Even though Moody’s downgraded Spanish debt yesterday?

Yep, that was a non-event. It’s not so much that the markets disagree with Moody’s move, as that this downgrade has been in the works -- and baked into the market -- for weeks. The weakness in Eurozone debt yesterday and today is a vote that nothing significant will emerge from the latest round of talks on solving the euro debt crisis.

At the same time, the debt markets are also saying Portugal will need a rescue (34% chance) and that there’s a 60% chance of a Greek default. The markets give Ireland a 40% chance of default.

These reads all come from the market for credit-default swaps. Credit-default swaps give the buyer protection (as long as the guy on the other end of the deal doesn’t go bust) against default of a country’s bonds for five years -- for a price. The higher the price, the greater the odds -- in the market’s opinion -- a country will default within five years.
 

The tablet goes on sale today, and analysts expect it to sell faster than the original.

By Kim Peterson Mar 11, 2011 2:48PM
Credit: (© 2011 Apple)
Caption: ipad 2One analyst predicts Apple (AAPL) will sell 600,000 of its new iPad 2 tablets this weekend. The iPad 2 is already for sale on Apple's website and hits stores later today at 5 p.m. local time.

The lines are growing outside of Apple stores. One woman grabbed the first spot in line at Apple's flagship store in New York City, and after 41 hours of waiting sold her spot for $900, Mashable reports. She plans to buy Lady Gaga concert tickets with the money.

Apple has been through this before. It sold 300,000 of its first iPad in 24 hours, and the device went on to become the fastest-selling technology gadget in history, from a revenue standpoint, Bloomberg reports. Analyst Brian Marshall of Gleacher & Co. expects 600,000 iPad 2s to be sold this weekend. If his prediction proves true, the iPad 2 would smash the record set by its predecessor. 

Funds linked to the world's most prevalent industrial metal can often predict mood shifts.

By TheStreet Staff Mar 11, 2011 1:15PM

Image: Stock charts in crystal ball © Fredrik Skold/Getty ImagesBy Gary Gordon, TheStreet

 

The worldwide bull market for stocks turned two years old on March 9, 2011. And so far, there have been two meaningful corrections -- one in 2009 and one in 2010.

 

Some in the media have suggested that the Dow Jones Industrial Average ($INDU) might not experience any significant pullback, like the way U.S. stocks behaved in 1995. Others believe that stock assets will get knocked for a major headache, but eventually stake a claim to new heights.

 

There is a third possibility. Commodity price inflation, real estate struggles, Middle East uncertainty, eurozone debt, rising interest rates and U.S. deficit woes collectively undermine faith in the toddling bull market. After all, they don't call it the "terrible twos" for nothing!

 

If you were expecting Japan's disastrous temblor to rock US markets, consider what some economics professors discovered 20 years ago.

By MSNMoney partner Mar 11, 2011 1:11PM

Stock market data © Photodisc/Getty ImagesBy Mark Hulbert, MarketWatch


The U.S. stock market appears to be largely shrugging off news this morning of the most powerful earthquake to hit Japan in more than 100 years.


That surprises many observers, especially those old timers who remember a nightmare scenario that haunted many in the early 1980s. That's when the Japanese economy was riding high and Tokyo real estate was the most expensive in the world.


Analysts worried about what would happen if a major earthquake hit Japan, triggering huge claims against insurance companies, which in turn would have to liquidate major portions of their stock and bond holdings in the United States. Cover stories in some financial magazines were devoted to the stock market crash that would result. Still, from a different perspective, the market's reaction Friday morning does not come as a particular surprise.

 

Toyota, Sony and other Japanese ADRs trading on U.S. exchanges fall in the aftermath of Friday's earthquake.

By TheStreet Staff Mar 11, 2011 1:07PM

TheStreetCaption: Vehicles are crushed by a collapsed wall at a carpark in Mito city in Ibaraki prefecture on March 11, 2011 after a massive earthquake rocked Japan
 
Credit: JIJI/PRESS/AFP/Getty ImagesBy Robert Holmes, TheStreet

 

Toyota (TM), Sony (SNE) and other Japanese American depositary receipts, or ADRs, were sinking Friday in the aftermath of one of the largest earthquakes in Japan's history.

 

The offshore earthquake hit Japan Friday afternoon with a magnitude of 8.9 and triggered a tsunami. Video footage showed tsunami waves that swept over towns, fields, and even airports. Effects of the tsunami were felt along the coast of Hawaii hours later.

 

Asian stock exchanges dropped in reaction, with the Nikkei tumbling 1.7% and Hong Kong's Hang Seng down 1.5%.

 

The Oracle of Omaha is expecting a decade dividend double.

By Motley Fool Pick of the Day Mar 11, 2011 12:48PM

Credit: (© Jason Reed/Reuters file)
Caption: Warren BuffettBy Motley Fool contributor Chris Baines.

 

In his latest investor letter, Warren Buffett revealed an important clue regarding what's in store for Berkshire Hathaway's (BRK.A) largest holding, Coca-Cola (KO).

 

"In 2011," he wrote, "we [Berkshire Hathaway] will almost certainly receive $376 million from Coke, up $24 million from last year. Within 10 years, I would expect that $376 million to double."

 

Say what, Buffett? You expect Coke's dividend to double in a decade's time? My math reveals that Coke would have to grow its dividend by at least 7% per year for that to happen. This is interesting, since Wall Street rarely expects a 7%-plus growth rate from a mature consumer staple like Coke.

 

Rising oil prices could create a short-term problem for the miner. There are long-term production issues as well.

By Jim J. Jubak Mar 11, 2011 12:31PM
Jim JubakIt clearly hasn’t been enough.

On Feb. 24, Thompson Creek Metals (TC) reported fourth-quarter and full-year results that showed record production of molybdenum in 2010, as well as a fourth-quarter revenue increase of 48%.

Net income, adjusted to exclude the accounting loss from outstanding stock warrants (incurred when the company
switched to U.S.-style GAAP accounting in 2010), increased in the quarter by 43%.

Thompson Creek shares closed at $13.58 that day -- and it’s been pretty much downhill ever since. On March 9, shares closed at $12.28.

Two problems, one short term and one long term, explain that trajectory, I think.
 

Seek safety in Hershey, Smucker and other companies that produce consumer staples.

By TheStreet Staff Mar 11, 2011 12:27PM

Image: Groceries (© Jeffrey Hamilton/Getty Images/Getty Images)By Jake Lynch, TheStreet

 

With crude oil trading around $100 a barrel, the Middle East region on the brink and the Federal Reserve ending its bond-buying program soon, investor sentiment has turned. Thursday, the S&P 500 ($INX) fell 1.9% after rallying 24% since September. The following consumer-staples stocks -- shares of companies that produce goods needed to live -- are ranked highest by TheStreet's quantitative equity model.

 

Of note: Several represent food-products companies, which are subject to higher costs due to the recent rise in commodity prices. Their ability to pass on increased prices to consumers without affecting demand varies.


TheStreet's stock model incorporates both fundamental and technical factors. The stocks are ordered by net score, from good to great.

 

American Apparel's chief lawsuit officer. Talks about tapping the country's oil reserves. Radient's relationship issues.

By TheStreet Staff Mar 11, 2011 11:52AM

TheStreetImage: Oil drums (© Kevin Phillips/Digital Vision/age fotostock)Here is this week's roundup of the dumbest actions on Wall Street.

 

5. American Apparel's chief lawsuit officer

 

American Apparel's (APP) eccentric CEO Dov Charney is once again in the hot seat -- this time with a former employee, who says he forced her to perform sexual acts while she was working at the company as a teenager.

 

This isn't the first lawsuit filed against Charney, who has made a name for himself more for his alleged indiscretions than his flailing t-shirt business. Maybe there's an argument that Charney's eclectic persona helped lift American Apparel up the retail ranks. But for a public company, Charney's reputation has become more of a liability then an asset. So why is he still allowed to hold a position of power?

 

The disaster dovetails with the current end-of-the-world thesis.

By Jim Cramer Mar 11, 2011 10:01AM

jim cramerthestreetIn a testament to how quickly this market has turned bad, we don't see any positive action in any of the usual suspects that are needed to rebuild a rich country's infrastructure after a terrible natural disaster like Japan suffered last night.

 

Normally you would expect to see companies that supply timber, copper and earth-moving equipment to go up, as we initially saw when Australia, another place that can afford to rebuild, got hit by natural disasters.

 

But we are in one-way mode now in that a natural disaster is viewed as just one more compounding event to dovetail with the end-of-the-world thesis that has now taken center stage.

 

Reviewers hate the new cameras but say the iPad 2, which goes on sale Friday, is still the best on the market.

By Kim Peterson Mar 10, 2011 3:15PM
Credit: (© 2011 Apple)
Caption: ipad 2The iPad 2 is almost here, and already the tech reviewers are raving that Apple's (AAPL) new tablet is the best one in a field that's about to get a lot more crowded.

The device isn't perfect, the reviews say, but the iPad 2 is better than anything else out there.

Apple will kick off iPad 2 sales Friday on its website at 4 a.m. EST, giving online shoppers a head start. Then at 5 p.m. local time, the device will be available at Apple stores, as well as at Target (TGT), Wal-Mart (WMT) and Best Buy (BBY).

The iPad 2 is a third thinner and up to 15% lighter than the original. It has the same 9.7-inch diagonal screen as its predecessor, but it adds two cameras -- one in front and another in back. Inside, it has a new processor, called the A5, and the ability to run programs and display websites faster. 

Bears focus their pressure on the stocks that led the post-September rally, signaling that the market correction is far from over.

By Anthony Mirhaydari Mar 10, 2011 2:16PM

Over the last few weeks, a curious stalemate had developed in the stock market. The bears, encouraged by soaring oil prices, political turmoil in the Middle East and Africa, and fresh worries over European debt problem, have come out of hibernation in a big way for the first time since the seven-month market uptrend started last September. They've viciously defended the 2,800 level on the Nasdaq Composite.

 

The bulls continue to believe that the Fed's easy money will win the day and literally paper over the world's problems with cheap dollars. They've defended the Nasdaq's 50-day moving average.

 

But on Thursday, the stalemate was broken as the bears eviscerated stocks in leading sector groups like semiconductors, materials and energy. The rotation out of cyclical, high-beta sectors suggests the bulls are now in full retreat. And that means there is more downside movement yet to come.

 

There's more growth left in this Chinese firm than you'd think.

By Motley Fool Pick of the Day Mar 10, 2011 2:14PM

Fool analyst Jim Mueller is back with another stock for his my Messed-Up Expectations (MUE) portfolio. His idea this time comes from a company that's been able to keep its head above water even in the raging rapids of the credit crisis.

 

Rex Moore, Motley Fool Top Stocks Editor


If you like gadgets, then you probably like Nam Tai Electronics (NTE), or at least have used its products. It's a Chinese maker of components used in putting together cell phones, notebook computers, digital cameras, and other electronic gadgets. While it doesn't sell directly to consumers, it is affected by the success of those that do.

 

As you might imagine, it was hit pretty hard by the last recession, with revenue dropping 20% and 34% in 2008 and 2009, respectively, while net income fell 56% and 95% for those two years. Even in the depth of the recession, however, it managed to eke out a profit, something that its two major competitors, Jabil Circuit (JBL) and Flextronics International (FLEX), can't say.

 

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