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.

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Funds that hold commodities or rely on complicated strategies used to occupy a small niche in the fund industry, but that's changing.

By TheStreet Staff May 16, 2011 1:22PM

By Stan Luxenberg, TheStreet

 

Alternative funds once represented a small niche in the mutual fund universe, but that is changing.

 

During the past year, inflows into alternative mutual funds and exchange-traded funds have totaled $25 billion, according to Morningstar. Now the category has $151 billion in assets and includes 540 funds.

 

Morningstar recently announced that it would begin tracking new categories of alternative funds, including inverse debt and managed futures. "It's clear that alternative funds are here to stay," said John Rekenthaler, vice president of research for Morningstar.

         

Alternative funds aim to diversify portfolios by focusing on investments that don't necessarily track stocks or bonds. The funds hold commodities or use complicated strategies, such as trading futures or selling stocks short.

 

This fund offers investors fixed-income exposure to growing economies.

By TheStreet Staff May 16, 2011 12:34PM

Image: Brazil (© Donald Edwards/age fotostock)By Roger Nusbaum, TheStreet

 

Exchange-traded fund companies have offered increasing specialization in equity ETFs for years, and now that trend is coming to fixed-income ETFs.

 

The most interesting new bond ETF is Market Vectors' LatAm Aggregate Bond ETF (BONO). LatAm is short for Latin America. The ticker symbol is taken from bono, which is Spanish for bond.

 

This new ETF tracks a large number of countries. Brazil has the largest weighting, accounting for 27% of the fund, followed closely by Mexico, which accounts for 26%. Colombia has a 12% weighting, the Cayman Islands has 8.8%, and Chile has a disappointingly low 2.9%. There are also more than a dozen countries with individual weightings of less than 1%. The fund has more than 450 holdings, which explains why some of the country weights are so small.

 

This small-cap defense company has the all the right qualities.

By Motley Fool Pick of the Day May 16, 2011 11:54AM

By Jason Moser

 

A little more than a week ago, I penned an article citing three stocks on my watch list, thinking that at least one of them had a good chance of making it into my real-money Rising Stars portfolio. Now I'm putting one of those stocks to work and playing a little defense in my quest for investing domination.

 

The business
Elbit Systems
(ESLT) may not be what you would call a headline stock, but the company takes care of business when it comes to defense. Based out of Haifa, Israel, Elbit is the largest non-government-owned defense company in Israel, with an extremely diverse range of programs and clients around the globe with business segments in the U.S., Israel, Europe, South America, and Asia.

 

And the technology is cool. Elbit's a major player in everything from aerospace and helmet-mounted systems to lasers and advanced C4I (command, control, communications, computers, and intelligence) systems.

 

Soup is all but forgotten as a meal choice, even though Americans have plenty of cans in their pantries. With video.

By Kim Peterson May 16, 2011 11:53AM
Campbell Soup (CPB) is in a rut.

The stock price has stumbled over the past year. Sales have fallen in eight of the past 10 quarters. Profit is down from a year ago, and the company has lowered its full-year forecast. The chief executive is leaving.

Soup doesn't sell that well anymore. Americans have all kinds of choices for quick meals at home, leaving the can of soup -- once the go-to choice for lunch in a jiffy -- in the dust. People still buy soup, but they just forget to eat it, so the cans are relegated to the back of the pantry.

Post continues after this video about Campbell's troubles: 

Materials and industrials look technically vulnerable, meaning investors should exercise caution and have tight stops in place.

By MoneyShow.com May 16, 2011 11:35AM
By Tom Aspray, MoneyShow.com

Since the March 2009 lows, two of the best-performing sector ETFs have been the Industrial Select Sector SPDR (XLI) and the Materials Select Sector SPDR (XLB). XLI is up 148% from the March lows and XLB is up 117%, while the S&P is up 100%.

Of course, many of the individual stocks in these sectors have seen even more dramatic gains, and soon after the lows were formed, the relative performance analysis of these groups identified them as the star performers.

In August 2009, I noted that the S&P Industrials had completed a reverse head-and-shoulders bottom formation. The sector closed that week at 219 and hit a high last week of 336.
 

Don't be seduced too easily into buying ETFs, ETNs or other exotic investment products.

By TheStreet Staff May 16, 2011 11:00AM

Image: Throwing money down a hole (© Art Glazer/Stock Illustration/Getty Images)By Greg Plechner, TheStreet

 

We've seen the cliche, a 40-year-old hitting a midlife crisis and trading in his reliable 2002 Toyota Camry for a faster sports car that will likely get him into trouble -- at home and on the road. While we can all relate to being lured by owning the trendiest hot-ticket item, sometimes it's best to avoid those temptations, including when it comes to choosing retirement investments.

 

When you are in your 40s, you're well into what is often viewed as the "accumulation phase" of retirement planning, the period when you are usually working and contributing regularly to your 401k and other retirement accounts to build up your retirement nest egg. You may be advised to buy a diverse mix of mutual funds at companies with low cost structures and consumer-friendly business practices.

 

Which you do, of course, until a newer and sometimes more exotic product hits the market, with the promise of better and bigger returns. Recently, ETFs and ETNs have become those vehicles. Proponents point to their tax efficiency and low expenses, but they can also be more complex and potentially riskier. Before you trade in your staid mutual funds, take a closer look at what you are buying.

 

Keep an eye on funds tracking silver, agriculture, construction, retail and the Dow.

By TheStreet Staff May 16, 2011 10:13AM

Image: Watching ETFs (© Don Carstens/Jupiterimages)By Don Dion, TheStreet

 

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

 

1. iShares Silver Trust (SLV)

 

As forecast in last week's "5 ETFs to watch," commodities have continued to behave in a volatile manner. The bullion-backed SLV's performance was particularly bipolar. During the early part of the week, SLV managed to pull off gains, but its strength was short-lived. By Friday, it had retreated to the previous week's lows.

 

Silver will continue to generate press in the week ahead as market watchers debate and discuss the longevity of the current commodities shakeup and look for ways to navigate it.

 

Although I continue to view precious metals as a promising long-term play, I urge investors to avoid being overly exposed to this asset class. By keeping exposure to materials like gold and silver small and concentrated, you can benefit from their long-term defensive nature while protecting against short-term volatility.

 

We've been fortunate to avoid a big sell-off in stocks. Stay conservative this week.

By Jamie Dlugosch May 16, 2011 9:49AM

If you are not trading in this market, you are either stubborn or ignorant. For those die-hard buy-and-hold followers, it is probably a combination of the two.

 

For the rest of us interested in making money in a market rigged against the little guy, we have no choice but to be nimble. Thank goodness Wall Street created exchange-traded funds.

 

While corporate profits continue to impress, stocks have traded sideways over the past two weeks. Consider yourself lucky that we have not gone lower.

 

I expect that to change soon. As such, I would strongly consider an ultra-short ETF for your portfolio this week. My choice would be ProShares Ultra Short Technology (REW).

 
Tags: etf

Recession-resistant shares like Merck and ConAgra are due for a rest. Look for them to hand over the lead as the 'roving bull market' trend continues.

By Jim Cramer May 16, 2011 9:12AM

the streetjim cramerIf you didn't know any better, you'd think we are already in a housing- and credit-led recession. There's no other way to read the stock charts and think otherwise.

 

The most standout performers are the companies that can be described only as extremely recession-resistant, whether it's tobaccos or the pharmas or the medical devices or the plethora of grain-buying food companies.

 

Meanwhile, techs, oils, industrials and banks are silently rolling over and causing some real underperformance.

 

In fact, if it weren't for the terrific performance in utilities, I would just say "Look out, double dip is here." I write "if it weren't for this," because in the Great Recession we used so little energy that utility stocks came totally unglued. Now stocks like Dominion (D) and FirstEnergy (FE) -- the latter always thought to be a complete dog -- are generating tech-in-its-heyday-like performance.

 

To save on its European labor costs, the fast-food icon will borrow the self-checkout model from retail. Will its US locations be next?

By InvestorPlace May 16, 2011 8:57AM

Image: Hamburger (© BananaStock/Jupiterimages)McDonald's (MCD) is trying to make fast food even faster.


The Financial Times reports that the world's largest fast-food chain plans to replace many of the cashiers at its 7,000 European restaurants with touch-screen terminals that allow customers to order and pay electronically.


The system is similar to what many consumers experience in supermarkets, retailers and gasoline stations that have opted for self-checkout to save on labor costs. McDonald's says the move is about making its European restaurants more convenient and efficient. It's also clearly about keeping down costs. If it succeeds, you can bet the trend will come soon to the U.S.

 

The odds are against stocks making a sustained comeback in the short term. Unless you’re an intra-day trader, the best advice is to hold on for the ride and make sure protective stops are in place.

By MoneyShow.com May 14, 2011 12:08AM
By Tom Aspray, MoneyShow.com

The rollercoaster ride continued last week in both the stock and commodity markets—if you’re keeping track, the S&P 500 was up three days and down two.

The commodity markets were also very choppy, and there are some worrisome signs in the energy patch. The Energy Select Spyder (XLE) and many of the biggest oil companies, including ExxonMobil (XOM), Chevron (CVZ) and Schlumberger (SLB) have completed top formations. (For full technical appraisal, please see Big Oil’s Big Top.)

It looks as though my view is at odds with the big hedge funds, as The Wall Street Journal reported on Friday that several of the largest hedge-fund managers were bullish on the energy sector.

With Friday’s sharply lower close, the stock market is in a precarious position for the short term, and the odds now favor further selling this week. This high volatility is not an investor or a swing trader’s friend, but those who trade intra-day may be having a good time.

The number of bulls according to the AAII sentiment numbers continues to decline, and is now at 30%, not far above last summer’s lows. For specific price levels to watch, see below.
 
Tags: goldoil

A new grain forecast is bringing down farm-related stocks -- and creating a good buying opportunity.

By Jim J. Jubak May 13, 2011 3:47PM
Jim JubakThe May 11 crop forecast from the U.S. Department of Agriculture knocked the chaff out of the grain market. Corn fell in price by the most allowed on the Chicago Board of Trade, and wheat and soybean prices followed downward.

The cause of the plunge? The USDA said that grain inventories at the end of the harvest year will be larger than expected.

Corn stockpiles will climb to 900 million bushels, for example. That’s a significant 23% higher than the 730 million bushels this year. Of course, this year’s 730 million bushels is the lowest stockpile in 15 years.

You can understand why that kind of switch would have sent some commodities traders scurrying to take profits. The price of corn has doubled in the last year, as traders bet that the slim margin of error represented by that 15-year low would generate enough fear of shortages to keep prices rising.
 

The company wisely locked in prices for coffee before they hit a 34-year high. But what will happen next year?

By Kim Peterson May 13, 2011 3:21PM
Coffee prices hit a 34-year high earlier this month, but Starbucks (SBUX) doesn't seem to be too worried.

The company has already locked in its coffee costs for the year, John Culver, the president of Starbucks Coffee International told Swiss newspaper Tages-Anzeiger. So as other food producers struggle with the rising costs of raw ingredients, Starbucks has kept a lid on costs of its most important material.

Culver said he thinks the cost of coffee will come down. "We think that these prices are not based on facts given there is no supply problem," he told the newspaper, according to Reuters. "Speculators are at work here." 

With stocks and commodities sliding as the US dollar strengthens, here are 2 new short ideas to profit from the decline.

By Anthony Mirhaydari May 13, 2011 2:39PM

For months, the bulls have had it all their way. The anti-dollar "carry trade" -- fueled by a falling dollar -- helped push up risky assets across the board as hedge fund types crowded into popular trades like crude oil, silver and foreign stocks. It was all about momentum. And the gauge of sentiment was the undulations of the euro-dollar exchange rate. When it was rising, all was right in the world.

 

That's changing now as the U.S. dollar perks up against the euro in a big way. Why? Concerns over inflation, slowing economic growth and a dramatic bursting of the commodities bubble as speculators get squeezed out of crude oil and precious metals. 

 

In my recent columns and blog posts, I've highlighted all of these concerns and have recommended targeted short positions against energy and emerging-market stocks. Today, I want to recommend a few more that are focused mainly on European equities, which are showing fresh signs of weakness as the euro drops hard.

 

PepsiCo and CSX are among the companies that have recently increased their payouts.

By TheStreet Staff May 13, 2011 1:39PM

By Jonas Elmerraji, StockPickr

 

Dividend stocks had another strong week last week, with dozens of firms announcing dividend payouts or increases timed around their earnings releases for this quarter. While the market isn't currently reflecting the fundamental outperformance stocks are showing this earnings season, investors are turning to dividend-payers to get gains out of their portfolios.

 

With 2011 shaping up to be the biggest year for dividends since before the market crash of 2008, it makes sense to take a look at what dividend stocks are offering. That's because, contrary to popular belief, dividend payouts and capital gains aren't mutually exclusive.

 

On a total return basis, dividend stocks significantly outperform their non-payer peers as a whole. Over the last 36 years, dividend stocks outperformed the rest of the S&P 500 by 2.5% annually, and they outperformed nonpayers by nearly 8% every year, all while paying out cash to their shareholders, according to a study from NDR.

 

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[BRIEFING.COM] The stock market finished the Thursday session on a higher note with the S&P 500 climbing 0.5%. The benchmark index registered an early high within the first 90 minutes and inched to a new session best during the final hour of the action.

Equities rallied out of the gate with the financial sector (+1.1%) providing noteworthy support for the second day in a row. The growth-oriented sector extended its September gain to 1.9% versus a more modest uptick of 0.4% for the ... More


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