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.

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After a historic performance for the month of September, equities struggle to overcome resistance.

By Anthony Mirhaydari Sep 29, 2010 3:02PM

MirhaydariDefying expectations of a typical September selloff, stocks have instead pieced together a historic rally -- which was what I expected back on September 1. For the month to date, the S&P 500 is up 9.2%. That's the best performance for the month of September since 1939. Since 1928, Septembers have on average posted a loss of 1.2%.

 

In fact, using market price information going all the way back to the late 1700s thanks to the work of Global Financial Data, the past month has been second best September in the history of the American stock market. Runners up in include the 8.3% gain in 1954 and the 8.1% gain in 1891.

 

But now, after a historic run, there is evidence that a pullback is increasingly likely. Stocks, represented by the S&P 500 ($SPX), have hit solid resistance from January's highs near 1,150. Breadth continues to narrow as demand fades. Here's what you need to know.

 

The Bank of England has dropped savings account interest rates to near zero in hopes of kick-starting the economy.

By Kim Peterson Sep 29, 2010 2:19PM
Cash © Jonathan Kitchen/Getty ImagesQuit whining about the economy. You're not making any money from your savings, so start spending!

That's the message from one Bank of England official, according to the Telegraph.

Charles Bean, the deputy governor, said that older people should not expect to live off the interest from their savings accounts. The savings interest rate has dropped to about 0.23%, causing problems for the 5 million or so retirees who try to survive on interest payments, the Telegraph reports. 

Short interest has dropped almost in half, which should be a good sign in anyone's book.

By Jim Van Meerten Sep 29, 2010 1:27PM
I've added Costco Wholesale Corp (COST) to my New High portfolio. The company operates membership warehouses based on the concept that offering members very low prices on a limited selection of nationally branded and selected private-label products in a wide range of merchandise categories will produce high sales volumes and rapid inventory turnover.

Rapid inventory turnover enables Costco to operate profitably at significantly lower gross margins than traditional wholesalers, discount retailers and supermarkets. 

The popular maker of Keurig coffee machines plummets on news of an SEC investigation.

By Kim Peterson Sep 29, 2010 12:27PM
Credit: (© Toby Talbot/AP)
Caption: A single-serving coffee maker at the Green Mountain Coffee Roasters outlet store in Waterbury, Vt.Shares of Green Mountain Coffee Roasters (GMCR) were down about 17% in midday trading as investors reeled from an after-hours disclosure Tuesday night.

Buried at the bottom of an 8-K regulatory filing, Green Mountain delivered some bad news: The U.S. Securities and Exchange Commission is investigating the company and has requested documents.

The SEC isn't saying much, but based on the request, Green Mountain thinks "certain revenue recognition practices" are the focus. Also in question is the company's relationship with one of its vendors. 

KKD is climbing out of its hole after a stock crash and a rash of store closures a few years back.

By InvestorPlace Sep 29, 2010 10:03AM

Consumers in Thailand craving the signature taste of a hot, fresh Krispy Kreme (KKD) glazed doughnut will no longer have to suffer. The sweets shop announced today that it will open its first store in Thailand, in the center of Bangkok's business district. Company officials expect to open approximately 20 stores in Thailand over the next five years. 

 

The Thailand opening is part of a larger expansion, as just last month the company announced the construction of stores in the Dominican Republic. Krispy Kreme now offers its products in 22 countries and is showing signs of growth after a very steep and very public flop a few years ago.

 

The semiconductor sector has sprung back to life during this rally, and one stock in particular is still worth buying aggressively.

By Jim Cramer Sep 29, 2010 8:46AM

jim cramerBy Jim Cramer, TheStreet

 

The semiconductor group had been among the most hated in the market. I know it, not just because of the myriad downgrades and give-ups but because when I go on Twitter to read responses to my posts and the articles I write, I see the criticism, including lots of people claiming you can't buy these stocks in September.

 

Of course it was tough to be more wrong than that. The Semiconductor HOLDRS (SMH) went from $24.20 to $27.60 in that period, and the Philadelphia Semiconductor Index (SOX) rallied from 307 to 347. Just a huge and bountiful takeoff. Of course I received a huge round of apologies for the flaming I took. Oh, wait, no, I didn't; that almost never ever happens. Particularly with many of the Web cretin critics.

 

But you have to marvel at all of the people who gave up on Intel (INTC) at $17-$18 or hated Texas Instruments (TXN) at $25 before this juicy breakout and pooh-poohed Altera (ALTR) as a company with no momentum or said that Nvidia (NVDA) would never get past 10. TriQuint (TQNT) and RF Micro (RFMD) were left for dead, roadkill, and now they are doing cartwheels.

 

It's becoming harder for the food and beverage industry to absorb higher prices for ingredients.

By Kim Peterson Sep 28, 2010 4:46PM

Coffee beansSome of Starbucks' (SBUX) key ingredients -- coffee, milk, chocolate and sugar -- are becoming more expensive worldwide, and that's taking a toll on the company's bottom line.

Arabica bean prices have risen steadily for the past two years and recently reached 13-year highs. Those are the milder beans favored by Starbucks and Green Mountain Coffee Roasters (GMCR) (see this chart for more).

The cost increases are so high that Starbucks said it can no longer absorb them. "The extreme nature of the cost increases has made it untenable for us to continue," the company said. As a result, Starbucks is raising the prices of its bigger and more complicated drinks.

 

Ormat Technologies has potential, but the risks in the stock keep rising.

By Jim J. Jubak Sep 28, 2010 3:41PM

Jim JubakIt's increasingly hard to figure out how much risk there is in owning shares of Ormat Technologies (ORA).  


There's no doubt in my mind that the company is the best global pure play on the expansion of power production from geothermal sources. But how much potential return do I need to see before the risks in that pure play are worth taking? Especially since the risks in the stock keep rising.

 

Government price subsidies and financing programs for geothermal power are shakier than they were a year ago (and they were pretty shaky back then, too). The financial markets haven't become much more forgiving for projects like these.

 

The BlackBerry maker finally gives some details about a new tablet it hopes can compete with the iPad.

By Kim Peterson Sep 28, 2010 2:59PM
RIM Playbook (© 2010 Research In Motion)The PlayBook. Sounds fun, right?

It's a handheld tablet computer -- hence the "book" part of the name -- but you get to play on it, maybe? But here's the confusing part: The PlayBook is being developed by Research in Motion (RIMM).

RIM makes the BlackBerry line, and is focused with laserlike precision on business productivity. It's calling the PlayBook "the first professional tablet," although the name says it's anything but. 

As the company's stock flirts with the record milestone, analysts and investors find reasons to believe it's still worth the high price.

By TheStreet Staff Sep 28, 2010 11:01AM

thestreetArrow © Cory Docken/JupiterimagesBy Scott Moritz, TheStreet

 

As Apple (AAPL) approaches a $300 share price, it nears a $274 billion market cap, second only to Exxon Mobil's (XOM) $315 billion value as the largest U.S. company by stock value. Apple sits high atop the tech sector, with Microsoft now a distant second at $214 billion.

 

And as Apple continues to climb, some analysts see reason to point even higher. On Monday, for example, Canaccord analyst Mike Walkley raised his price target for Apple by $10 to $366.

 

Helping to drive the Apple gusto is the excitement around the popular iPad. One possible bonus is Verizon (VZ). Long a holdout on Apple products, the No. 1 telco is expected to start selling a Verizon 3G iPad early next year.

 

A couple of slow-moving telecoms are finally hitting 52-week highs. With dividends that rival those of utility companies, they are still worth buying.

By Jim Cramer Sep 28, 2010 8:33AM

jim cramerBy Jim Cramer, TheStreet

 

At last, patience is being rewarded. For the longest time, whenever I was asked about stocks, which ones to buy, I almost always answered Apple (AAPL), Verizon (VZ) or AT&T (T). My thinking was that I wanted to have a high flier I believed in, a low flier I trusted.

 

Apple has been nothing but net forever. Just a huge win that keeps on giving, and you know I think it will get to $325 pretty easily. (That's been my price target, and I wish that people on Twitter would subscribe to RealMoney and ActionAlertsPlus so they wouldn't keep asking me if I still like it. I don't answer the question.)

 

But Verizon and AT&T? Good grief, these two have taken forever to move. At least you could reinvest the dividend, making them the ultimate pay-you-to-wait equities.

 

Businesses are buying new trucks and construction equipment, which is where Cummins shines.

By Jim J. Jubak Sep 27, 2010 3:01PM

Jim JubakAt this point in the economic recovery, I'd much, much rather own capital-equipment stocks than consumer stocks.  


As I noted in my post on Friday, corporate customers are buying capital goods to expand and upgrade their businesses, while consumers are still keeping their wallets shut tight (see my post). 


A case in point is Cummins (CMI), a maker of diesel engines. After a slow first half to 2010, the company's sales are showing solid increases that look as if they will extend well into 2011.

 

The index gives more weight to pricey stocks like CAT, which critics say skews it unfairly.

By Kim Peterson Sep 27, 2010 1:41PM

Arrow © Cory Docken/JupiterimagesCaterpillar (CAT) is carrying the DowJones Industrial Average ($INDU) on its back, with such a heavy weight in the index that critics say the Dow has become ridiculous.

Consider that Caterpillar is responsible for a full 40% of the Dow's rise this year, The Associated Press reports. If the stock didn't exist, the Dow would be up only 2.5% this year instead of 4.1%.

Caterpillar has seen a marvelous rise this year, going from the $58 range to nearly $80. Sales at the equipment company are on fire, mainly because of international demand.

 

Morningstar changed its rating formula, causing some funds to drop to junk status.

By Kim Peterson Sep 27, 2010 1:00PM
Woman leaning on files © PNC/JupiterimagesThink you invested in a solid bond fund? Might want to check again.

This month, Morningstar changed the way it rates bond funds to give lower-rated bonds more weight. As a result, a big chunk of funds saw their "average credit quality" rating drop, according to The Wall Street Journal.

Some funds saw significant drops from AA to junk grade. They include the TCW Short Term bond fund (TGSMX) and the Neuberger Berman Short Duration bond fund (NSBIX). AAA is the highest rating possible, while a BB and lower denotes junk status. 

Investors can expect stocks to continue their climb for the rest of the year.

By InvestorPlace Sep 27, 2010 10:37AM

Gold © Comstock Images/JupiterimagesBy Jamie Dlugosch


The market is having an Indian summer in September, and stocks are the place to be. At today's open, the S&P was up 8.5% in September, and the Nasdaq was up 12.6% so far for the month.

 

I suppose it was all very predictable. I wrote about Tony Robbins and his "get out of the market" YouTube video that had gone viral. Was there ever any better buy signal for stocks?


As if on cue, the rally began shortly after, and aside from one or two short pauses, it has been on a tear.

 

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[BRIEFING.COM] The S&P 500 trades higher by 0.2%.

The University of Michigan Consumer Sentiment report for July was revised up to 81.8 from 81.3 in the final reading, while the Briefing.com consensus expected the reading to be revised up to 82.0.

Separately, June construction spending decreased 1.8% month-over-month, while the Briefing.com consensus expected an increase of 0.3%.

Also of note, the ISM Index for July rose to 57.1 from 55.3, while the Briefing.com ... More


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