Indexes might not be in correction territory, but they're getting closer. Now's the time to consider what moves to make.
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With sentiment at a bullish extreme, one wonders whether equities can keep climbing.
It's true that based on a number of metrics, this market is overbought. Price volatility is extremely low. Small options investors are extremely confident, maybe even complacent, while large traders are growing increasingly skittish.
On the other hand, there are many positives. We are entering one of the strong periods of seasonality out there: the first quarter of the third year of a presidential term. And breadth is improving, with the cumulative NYSE advance-decline line pushing to new highs. Indeed, despite Thursday's midday losses for the major averages, as I write this, advancing issues are outpacing decliners by 200 issues.
China gets the emerging-markets spotlight, but things are also bright in Brazil, Chile and Peru.
By Kevin Grewal, TheStreet
As the developed world continued to struggle out of the Great Recession in 2010, emerging markets performed relatively well, and they're expected to sustain their growth and performance in the coming year.
China continues to draw headlines and steal most of the attention, but in the coming year, Latin America may be the place to look.
Inflationary threats and real-estate bubbles have forced China to increase its benchmark interest rates for the second time in three months and increase banking reserve ratios to reduce risk, which could hinder future growth.
This small company is a big player in the electrical industry.
For our pick of the day, Fool analyst Jason Moser is making a stop in Smallville -- where Houston Wire's specialized products and services separate it from the competition.
Rex Moore, Motley Fool Top Stocks editor
In a world that grows more wireless by the second, it's ironic but true: We still need wires. Sure, our smart phones, laptops and the Internet all come sans cables these days, but it all has to start somewhere. And Houston Wire and Cable Co. (HWCC) is there to make sure it all gets connected.
The battered financial has nowhere to go but up -- if you believe Wall Street price targets.
There's no shortage of articles offering the best stock picks for the new year. But allow me to throw one more on the pile before the ball drops with my recommendation of Bank of America (BAC). Why B of A? In a nutshell, I don't think things can get much worse for the battered bank.
Admittedly, this is a bit of a risky call, despite BAC rising about 17% in the past month. Bank of America has many problems in many areas, from a backlog of foreclosures to new regulations to Uncle Sam's ownership stake to plain old bad PR. But if you don't want any risk, you simply shouldn't be buying individual stocks in the current volatile market.
There are plenty of reasons to talk yourself out of buying B of A. But here are the three big reasons I found that talked me into buying:
The daily discount site is clearing the way to raise almost $1 billion in investor financing.
Groupon, the discount-deals site, is negotiating financing commitments with some of the biggest names on Wall Street, The New York Times reports. The company is preparing to go public as soon as the end of next year.
The Wall Street Journal reports that the financing under discussion could run as high as $950 million. That's because Groupon wants approval to sell as many as 30.1 million preferred shares of stock at $31.59 each.
Bargain valuations, steady revenue and emerging markets are reasons to buy.
My top stock pick for 2011 is a tech play. That may not surprise you, considering the big run by technology companies in the second half of 2010. But what may surprise you is what tech stock I'm throwing my weight behind: a tiny company called Microsoft (MSFT).
Admittedly, Microsoft hasn't given investors a lot to be happy about lately. The stock has been kicked to the curb, down about 8% this year, while the broader market has gained about 12%. If you're a momentum investor, this may turn you off, but I believe that the time is right for the rotation of capital back into this old standard. (Microsoft owns and publishes MSN Money.)
Why? Here three big reasons:
Expect controversy in gold funds and a comeback of leveraged funds, among other shifts, in the year ahead.
By Don Dion, TheStreet
With total U.S. assets recently crossing the $1 trillion mark, the ETF industry has continued to swell in 2010, becoming an undeniable force in the financial universe. The story of this rapid growth has had plenty of triumphs as well as controversy. Looking ahead to 2011, here are five predictions of what's next for exchange-traded funds.
1. Physically backed gold ETFs stir up controversy. While the rumor mill has buzzed about the trio of U.S.-listed physically backed gold ETFs -- SPDR Gold Shares (GLD), iShares Comex Gold (IAU) and ETFS Physical Swiss Gold Shares (SGOL) -- for some time now, controversy may go mainstream in 2011. "Gold bugs" and certain industry insiders have relished opportunities to whisper about the gold that's behind these huge ETFs, but the sheer size of these funds will undoubtedly begin to prompt questions on a larger scale.
It's tempting to chase the huge returns these names have generated in 2010. But remember: The higher they climb, the harder they fall.
By James Dlugosch, Stockpickr
Recent trading activity for Netflix (NFLX) offers investors a cautionary tale with respect to stocks with big valuations. Since crossing $200 at the end of November, shares of the home delivery video giant have dropped by more than 10% in December.
Investors, take note: The higher they climb, the harder they fall. For those chasing returns or momentum stocks, buying Netflix at the end of November would have been a mistake. Are there other stocks trading for big valuations investors should now avoid?
Certainly the warning signs were there for Netflix. Prior to November, the stock was a big winner. Shares had more than tripled in value in 2010, thanks to earnings growth and a future that many people predicted was unlimited.
One analyst, citing internal sources, says the new BlackBerry Playbook needs help.
The upcoming BlackBerry PlayBook from RIM has a battery that lasts only a few hours per charge, writes Shaw Wu, an analyst with Kaufman Bros. The Digital Daily blog picked up on the report.
If that's the case, the PlayBook will have a hard time making a strong run against the iPad, which can last for nearly 10 hours on one charge. Even Samsung's Galaxy Tab can go about six hours, writes John Paczkowski. Update: RIM has responded to Wu's claim. More below.
With the greenback sliding again, foreign stocks, gold and industrial metals are on the move.
It's well known that the U.S. dollar plays a unique role in the global economy. As the world's de facto reserve currency, it's always in high demand, especially in times of stress. That makes it, along with U.S. Treasury bonds, the haven asset investors flock to when fear and uncertainty strike.
And since most of the world's tradable commodities are denominated in dollars, its undulations affect the prices of things like gold, crude oil, copper and other metals. The strength and weakness of the dollar also push and pull foreign stocks, as hair-trigger hedge fund types always want to be positioned in assets denominated in rising currencies.
The snack-maker says half of its products will be now made from natural ingredients.
Well, Frito-Lay now wants to change that, according to USA Today. The snack-maker, a unit of Pepsico (PEP), says that in 2011, 50% of its products will be made from all-natural ingredients.
MSG will be removed from Lay's Barbeque and Tostitos Hint of Lime chips. Some products will lose the artificial colors as well.
These aggressive plays could gain from the noted investment strategist's anti-consensus expectations.
By Paul Mazzilli, TheStreet
Doug Kass, the investment strategist and a RealMoney Silver contributor, recently published his widely followed "15 Surprises for 2011." Below are some aggressive ways to play eight of those surprises through ETFs.
Note that many of these plays include leveraged and inverse ETFs, which are most suitable for short-term trading and which may have tracking errors over time.
Surprise: In line with consensus, the domestic economy experiences a strong first half, but several factors conspire to produce a weakening second half, which jeopardizes corporate profit growth forecasts.
ETF play: Stay invested early in 2011, but later in 2011, establish a long position in a leveraged inverse ETF that seeks minus 200% returns on a broad market index. The most popular is the ProShares UltraShort S&P500 (SDS).
From video Barbie to Tonka Chuck, toys topped the list of holiday must-haves.
One analyst said Mattel (MAT) and RC2 (RCRC) were the best performers.
Mattel shares have been on a nice six-month run, going from just less than $22 to close to $26 as of Wednesday. RC2 shares have climbed from $16 to $21.30.
Fears of military spending cuts are overblown, and these picks are well-positioned to win new contracts.
Rex Moore, Motley Fool Top Stocks editor
If, like me, you're an 8-year-old boy at heart, it's hard to imagine that missiles, tanks and fighter jets could ever fall out of favor.
Yet our allies in Britain are busy decommissioning warships, delaying weapons upgrades and canning the development of some high-tech military vehicles. Here on U.S. soil, meanwhile, we're hearing rumors that cuts in defense spending are as certain as slop in the mess hall (or a bad-tasting MRE). These fears have weighed on defense stocks, sending the group down 8% since the beginning of the year.
Privately held shares are being swapped so frequently that regulators are paying attention.
This is the same problem that forced Google (GOOG) into an IPO perhaps earlier than its founders wanted.
Facebook has issued privately held shares to employees and other investors, and those shares are being traded so much that the Securities and Exchange Commission has asked Facebook for more information about what's going on. The SEC has made similar requests in to Twitter, Zynga and LinkedIn, the Times reports.
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The company has made at least 4 acquisitions in the space, and few people have paid any attention.
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[BRIEFING.COM] The major averages finished the session on a modestly higher note, but not before heavy selling pressure sent the Nasdaq Composite (+0.3%) for a test of its 200-day moving average. The S&P 500, meanwhile, added 0.7% with all ten sectors posting gains.
Equities climbed at the open with the advance built on the relative strength of biotechnology and other momentum names. Despite the solid early gains in those areas, the market began fading from its high as multiple ... More
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