Technical Analysis

  • 24 Dec
    This market is making stocks like BWA look like bigger bargains every day

    This market is making stocks like BWA look like bigger bargains every day

    The market has been moving closer and closer into bear market territory, and if you’re a conservative investor, that is something that should make you more and more aware of the increasing risk of taking on new positions. If we are, in fact looking at the beginning of a new bear market, history suggests the worst is still ahead; the two previous bear markets in this century both saw the stock market decline by more than 50% before finding a bottom. More →

  • 21 Dec
    This is what the beginning of a bear market looks like

    This is what the beginning of a bear market looks like

    In the last week, bearish momentum has really started to pick up. This entire year has been punctuated by volatility driven by uncertainty, but it’s really only since late November that the overall market tone has actually started to turn negative. That fact has finally come to bear this week, forcing the S&P 500 below an important support level near its yearly lows around 2,600. Until this week, the market had managed to hold up pretty well in correction territory, using that support to bounce and move higher on multiple occasions – until now. More →

  • 14 Nov
    AAPL is down big since October – how much is it actually worth?

    AAPL is down big since October – how much is it actually worth?

    Apple Inc. (AAPL) is one of the biggest companies in the world; in August of this year, with the stock pushing nicely above $200 per share, they were the first company in the modern era to officially cross the $1 trillion dollar threshold. And over the last ten years, it is without a doubt one of the biggest performers throughout the course of the bull market. Along with its big tech brethren like Alphabet (GOOGL), Amazon (AMZN) and Microsoft (MSFT), AAPL has long been one of the companies that the rest of the market seems to have taken its cues from. More →

  • 13 Nov
    How close is the S&P 500 to a level that you should REALLY start to worry?

    How close is the S&P 500 to a level that you should REALLY start to worry?

    If you were watching the market sell off again yesterday, you probably started to wonder as I did if the market was really starting to follow through on the bearish sentiment that drove it back into correction territory for the Dow and the NASDAQ. The S&P plunged nearly 2% amid worries that the entire tech sector, which has paced and even led the market throughout its bullish trend since 2009, has finally peaked. The “FANG” stocks – Facebook, Apple, Netflix and Alphabet, and Amazon – all led the selloff as reports indicated that demand for Apple’s (AAPL) iPhone has weakened.

    If you’re listening to the talking heads on market media outlets, it’s even easier to buy into the negative hype, as more and more of them wring their hands and talk about the end of the bull market. The to remember, however is that while a correction always precedes a legitimate bear market, not all corrections are followed by a bear market. In fact, corrections are entirely normal, and even healthy; they are one of the things that makes a long-term upward trend sustainable. During its nearly ten-year bullish run since 2009, the stock market has experienced numerous pullbacks and corrections.

    Does that mean that all of the angst, worry and concern is overblown? I’m not sure; the truth is that the longer the market holds an upward trend, the greater the major trend reversal risk becomes. The truth is that when the market’s long-term upward trend does finally reverse – and make no mistake, it certainly will – the drop is likely to be extreme. First, consider that since bottoming in late 2009, the S&P 500 has more than quadrupled value; next, consider that in the last two bear markets, from 2008 to 2009 and prior to that, from 2000 to 2002, the downward trend shaved 50% or more from that index each time. As of yesterday’s close, the S&P 500 closed a little above 2,700 with its all-time high in late September coming at around 2,900; that means that if the market is actually starting the latest, inevitable slide to bear market territory, the bottom might not be seen until the index is around 1,400, or even lower.

    I think the real question isn’t if the market is going to reverse; it isn’t even when, despite the talk that seems to be dominating market news right now. Even the question of why or how it could happen is less important at the moment than identifying the point that I think every smart investor should be ready to acknowledge the reversal could actually be happening.

    Analysts like to use percentage declines as a barometer for how severe the latest drop from a high is. 10% is generally accepted as the level at which the market is officially in a corrective phase. The market’s drop in October put things in the second corrective phase of the year. Where is does the bear market come to play? The next percentage level is 20% – which for the S&P 500 would be around 2,300 based on its September highs. We’re still more than 400 points away from that point, which is why you might see some analysts maintaining their generally bullish stance right now.

    I like to use trend and pivot analysis on the broad market to supplement these generally accepted levels. I think the market is closer to a legitimate bearish signal than the 20% minimum suggests, and it is another reason a lot of people are wringing their hands right now. Here is what I’m seeing right now.


    This chart is for the S&P 500 SPDR (SPY), the ETF that matches the movement of the index. The prices shown on the right for the stock don’t equate directly to the S&P 500, but the percentages between prices are consistent, so this is a good proxy chart for the index. I’ve drawn a horizontal red line along the bottom of the chart using the previous low points the S&P 500 tested during the first correction of the year. That levels corresponds roughly with the 2,600 level for the index; as of yesterday’s close the market is a little less than 5.5% above that point. It came near to that point in October before rallying strongly towards the last couple of days and into the beginning of November.

    This red line is what I think most investors should be treating as the signal point; not necessarily for the point where the market has finally turned to bear market conditions, but rather the point where the market can actually confirm a legitimate downward trend. We’re not quite there, although the drop from the market’s pivot high a few days ago is a warning sign. If the index drops below its October pivot low, the market will officially be in a short-term downward trend. If that is then followed by a drop below the red line I’ve drawn, I think you’d be smart to say that the downward trend  is more likely to extend into an intermediate time frame, which could last anywhere from just a couple of months to as long as nine months.

    An intermediate downward trend doesn’t guarantee the trend will become a long-term one, and it doesn’t guarantee the market will drop into bear market territory; however given how raw the market’s emotional state appears to be right now, I think you would foolish to discount the very real possibility that the market could easily shift from uncertainty into legitimate panic once the market breaks below the 2,600 level. If that panic extends to massive selling, we’ll see a lot of average investors getting out of their positions and you’ll hear even more about concepts like “safe havens” and “flight to quality.” These are market conditions that exist when investors start dumping stocks and moving en masse into instruments like bonds, money markets, and even to cash. That hasn’t happened yet, but pay attention to the 2,600 level for the S&P 500. If the index drops below that level, and stays below it, don’t be surprised if the selling gets even worse. That’s why even as I’m writing about stocks in this space that I think represent interesting values right now, you should be very careful about taking on any new positions. When the sell-off really starts, it will be hard to find a place to hide, which means that you should be holding stocks you’re willing to ride out over the long-term, with conservative positions sizes that make it easier to limit your overall risk even in an extended bear market.

  • 26 Oct
    MORN: analyzing the stock that analyzes the market

    MORN: analyzing the stock that analyzes the market

    Wednesday after the market closed, Morningstar Inc. (MORN) released its latest quarterly earnings report. The numbers were good, and even beat most analyst estimates. Yesterday the market used that earnings beat to drive the stock up almost 14% in a single session – a move that naturally would make anybody that follows the market sit up and pay attention. Is the surge the first indication of a larger rally for the stock to new all-time highs? Maybe – more than one analyst report seems to think that while the stock is highly valued by most standard measurements, the high price is justified by a number of impressive fundamental metrics. I’m less convinced – not because the fundamentals are bad, but because I think betting on a stock that is only a little over 5% away from its recent all-time high under current market conditions is a very dangerous gamble.

    If you’ve been following the stock market for a while, either for stock trading or mutual fund investment, and you’ve spent any time doing your analysis, it’s a good bet that you’ve used MORN’s data. This is a company that was started in 1984 out of the basement of their current CEO with the mission to make stock market data, which up to that point was reserved practically exclusively for brokerages, investment banks and other institutional investors, more accessible to the average, everyday investor. Since that point, the company has grown into a $5.6 billion investment research company with operations all over the world. They operate in the same space as other, larger and perhaps more recognizable names including Moody’s, Standard & Poor’s, and Thomson Reuters – though with an admittedly different focus than most of those companies, whose primary market is on the institutional side. It is a bit of a twist to turn the analysis lens on one of the companies that investors like you and me rely on to analyze the rest of the market, but they are a publicly traded company, and that means that they deserve as much consideration as an investment alternative as any other stock.

    The Capital Markets industry is an interesting segment of the Financial sector, and the Professional Information Services segment is an area that should generally be less subject to economic cyclicality than other Financial stocks – especially those with significant interest rate exposure. The reason that is true is that the longer bull markets and economic expansion lasts, the more passive most people get about paying attention to the market; they tend to buy into the idea that the market is an easy place to make money and that all you have to do is “buy and hold.” When the economy contracts, or moves into recession, and the stock market follows suit, most of those lazy, passive investors get shaken out of the market, leaving the ones that are willing to take the time to do their homework. That is when information services like MORN’s offerings become more and more valuable to the motivated everyday investor. That is another reason I’m interested in seeing how this stock measures up – if the market is indeed at a tipping point, this might be a stock that may hold up better than most.

    Fundamental and Value Profile

    Morningstar, Inc. is a provider of independent investment research in North America, Europe, Australia, and Asia. The Company focuses to create products that help investors reach their financial goals. It offers a range of data, software, research, and investment management offerings for financial advisors, asset managers, sponsors, and individual investors. It provides data and research insights on a range of investment offerings, including managed investment products, listed companies, capital markets, and real-time global market data. It conducts its business operations outside of the United States through subsidiaries in countries, including Australia, Brazil, Canada, Chile, Denmark, France, Germany, India, Italy, Japan, Luxembourg, Mexico, the Netherlands, New Zealand, Norway, People’s Republic of China (both Hong Kong and the mainland), Singapore, South Africa, South Korea, Spain, Sweden, Switzerland, Taiwan, Thailand, the United Arab Emirates, and the United Kingdom. MORN’s current market cap is $5.6 billion.

    • Earnings and Sales Growth: Earnings and sales growth is very strong; over the last twelve months, MORN’s earnings grew 49%, while revenues increased about 10%. In the last quarter, earnings growth was nearly 35%, while sales growth was modest, at about 3.66%. Growing earnings faster than sales isn’t easy to do, and generally isn’t sustainable in the long-term; however it is also a positive mark of management’s ability to maximize its business operations. The company also operates with a very impressive margin profile, since Net Income over the last twelve months as of the end of the third quarter was almost 15.6%, and actually increased slightly in the third quarter to 16.5%.
    • Free Cash Flow: MORN’s free cash flow is healthy, at more than $207 million for the last twelve months as of the third quarter of the year. This number has also increased steadily over the past year.
    • Debt to Equity: MORN has a debt/equity ratio of .14. This number is very low, and reflects a conservative management philosophy about its use of leverage. The company also has excellent liquidity, with more than $351 million in cash and liquid assets against only $125 million in long-term debt.
    • Dividend: MORN pays an annual dividend of $1.00 per share, which translates to a yield of only .76% at the stock’s current price.
    • Price/Book Ratio: there are a lot of ways to measure how much a stock should be worth; but one of the simplest methods that I like uses the stock’s Book Value, which for MORN is $20.44 per share and translates to a Price/Book ratio of 6.39 at the stock’s current price. This is where the cracks start to show up in the argument for thinking about the stock as any kind of a bargain; the stock’s historical Price/Book ratio is only 4.82, suggesting that stock is almost 25% overvalued right now. Price/Cash Flow analysis makes the value picture look even worse, since the stock is currently trading 34% above that historical average. That means that the baseline “fair value” for the stock is anywhere from $86 to $98 per share. That’s not talking about the bargain price, mind you – that’s just the price range where most value-oriented investors would concede represents a fair value for the stock under normal market conditions.

    Technical Profile

    Here’s a look at the stock’s latest technical chart.


    • Current Price Action/Trends and Pivots: The chart above outlines the stock’s movement over the past year. Its upward trend until the beginning of September was very impressive – but so was the stock pullback from an all-time high price at around $144 per share leading into yesterday’s trading session. The stock actually covered more than half of the distance of that pullback in a single day on Thursday; the question that is hard to determine is what that outsized surge means. Conventional momentum analysis suggests the stock should follow that surge in momentum to keep driving towards the stock’s all time high; but such an atypical move also makes it quite like the stock could follow the same pattern that often happens when a stock gaps significantly away from its last closing price on an overnight basis. Most technical traders in that case would assume the stock would move back against that gap by at least half the size of the gap. That idea suggests the short-term momentum in this stock could easily translate to at least $7 of immediate downside risk.
    • Near-term Keys: The smart approach right now if you want to work any kind of short-term trade on this stock would be to wait for a day or two to let the stock start to develop a pattern away from Thursday’s massive move. If the stock pushes above Thursday’s closing price, the chances are pretty good the stock could push up to test near-term resistance between $135 and $139 per share – which might be a workable range for a short-term bullish momentum trade using call options or buying the stock outright. If the stock retreats off of Thursday’s closing price, however, don’t be surprised to see the stock drop back down into the mid-$120 level at least – that could be an opportunity to buy options with a target between $123 and $125 per share. Short-term, momentum-based trades are really the only practical way to work with this stock right now, since the overall long-term upside is limited by the stock’s all-time high at $144 and its incredibly overvalued status right now.

  • 10 Aug
    TRI: short-term bullish strength, interesting value potential. How should you play it?

    TRI: short-term bullish strength, interesting value potential. How should you play it?

    The search for bargains in the stock market is an ongoing challenge for any investor. Sometimes the challenge is harder than at other times; when the market is at or near historical highs, as it is right now for example, finding stocks that offer a legitimate value at their current price takes a little more work and effort. It also often means going against the grain of the broader market, since the best values are usually found in stocks that are trading at or near historical lows.

    Thomson Reuters Corp (TRI) is a stock that offers a somewhat different profile. As of this writing, the stock is only about $6, or 12.5% below its all-time high price at around $48 per share, but still well above its 52-week low price, which is around $34 per share. That certainly puts the stock in correction territory; but perhaps not yet at quite the level a strict value investor might generally look for to believe the stock is deeply discounted enough to warrant a more serious look. I think there are some really interesting elements to look at, however, that at least make TRI a stock that long-term investors should be putting on their watchlists; you may even decide that the stock is worth a serious look as a good value investment right now.

    Thomson Reuters is a multinational company, based in Toronto, Ontario, Canada that has been in existence since the 1850’s. The company deals in news and information services, including financial market, legal, and tax and accounting data. As you’ll see below, the company is a cash flow machine, with healthy operating profits, manageable debt, and a global footprint. Their latest quarterly earnings report was two days ago, and along with a generally positive financial report, also disclosed that they expect to complete a sale of a 55% stake in their Financial & Risk unit – the segment of their business that provides data and news primarily to financial customers, including brokerages and investment banks – to private equity firm Blackstone Group LP for $20 billion. A portion of those proceeds will be used to pursue expansion opportunities in their legal and accounting businesses.

    Fundamental and Value Profile

    Thomson Reuters Corp (Thomson Reuters) is a Canada-based provider of news and information for professional markets. The Company is organized in three business units: Financial & Risk, Legal, and Tax & Accounting. The Financial & Risk unit is a provider of critical news, information and analytics, enabling transactions and connecting communities of trading, investment, financial and corporate professionals. The Legal unit is a provider of critical online and print information, decision tools, software and services that support legal, investigation, business and government professionals around the world. The Tax & Accounting unit is a provider of integrated tax compliance and accounting information, software and services for professionals in accounting firms, corporations, law firms and government. The Company also operates Reuters, Global Growth Organization (GGO) and Enterprise Technology & Operations (ET&O). Thomson Reuters operates in over 100 countries. TRI’s current market cap is $29.7 billion.

    • Earnings and Sales Growth: Over the last twelve months, earnings and revenues both declined. This is a trend that has been typical of companies in the Capital Markets industry, and TRI’s performance was better than the industry average. TRI operates with a healthy margin profile, however, with Net Income a little more than 14% of Revenues over the last twelve months. This number also improved to nearly 50% in the most recent quarter.
    • Free Cash Flow: TRI’s free cash flow is very healthy, at $1.9 billion at the end of the first quarter of the year. This number also increased dramatically from the beginning of the year, at around $1.1 billion, but declined about $25 million in the second quarter. The decline was attributed primarily to costs related to the Blackstone transaction.
    • Debt to Equity: TRI has a debt/equity ratio of .40. Their balance sheet indicates their operating profits are more than adequate to repay their debt. The Blackstone sale, which should be completed by the end of the year will infuse even more cash (about $500 million in the last quarter) onto their balance sheet. Besides financing acquisitions as already observed, it will also give them the flexibility, if they choose to do so, to practically wipe out their long-term debt, which amounted to a little less than $5 billion.
    • Dividend: TRI pays an annual dividend of $1.38 per share, which translates to a yield of about 3.28% at the stock’s current price.
    • Price/Book Ratio: there are a lot of ways to measure how much a stock should be worth; but one of the simplest methods that I like uses the stock’s Book Value, which for TRI is $18.86 and translates to a Price/Book ratio of 2.22 at the stock’s current price. Their historical average Price/Book ratio is 2.28. That suggests the stock is fairly valued right now, which at first blush doesn’t imply a “screaming deal for a value-oriented investor. However, the Price/Cash Flow suggests a little different story, since it is trading almost 20% below its historical average.

    Technical Profile

    Here’s a look at the stock’s latest technical chart.


    • Current Price Action/Trends and Pivots: The red diagonal line measures the length of the stock’s intermediate downward trend, and also informs the Fibonacci trend retracement lines shown on the right side of the chart. The stock bounced off of trend support at around $36.50 to push up to its current price. Along the way, it has shown an almost picture-perfect, upward “stair step” pattern to establish its short-term upward trend. The stock has seen resistance around $42.50, which coincides with the 50% retracement line. A break above that level could see the stock push quickly to $44, with its 52-week high in the $48 range not far off from that point. The 38.2% retracement line, which is sitting at around $41, should act as a strong support level if the short-term trend has any chance of extending into an intermediate time period. A break below that level could see the stock drop back to its 52-week lows around $36 per share.
    • Near-term Keys: If you prefer to wait for a more cut-and-dried value proposition on this stock, it might be safer to wait and see if the stock can reverse its short-term upward trend and push near to its yearly lows, or even to extend them a little more; that would put the stock’s Price/Book ratio significantly below its historical average and make the value argument more compelling than it may be today. If its bullish momentum, continues and the stock pushes above $42.50, a good short-term momentum trade could lie in buying call options, or the stock outright, with a short-term target price around $44 or $45 per share. If the stock breaks down, and you want to work with the bearish side, a good put option or short selling set up would come below $41, with a target price at around $36 per share.

  • 08 Aug
    The S&P 500 is about to hit a new all-time high. How much upside can you expect?

    The S&P 500 is about to hit a new all-time high. How much upside can you expect?

    Since the beginning of July, the market has shown quite a bit of bullish momentum. As of this writing, the S&P 500 (SPY) has rallied more than 150 points from a pivot low in late June in the 2,700 area – a total gain in a little over a month of 9%. The index is now poised to match, and quite possibly exceed the highs it reached in late January. For most technical traders, a new high marks a break above resistance that should give the market momentum to keep pushing even higher. If you’re not the type of person, however to simply “leap before you look,” then like me, you want to try to figure out how much room is left.

    How much upside remains in the market isn’t an easy question to answer, simply because nobody can make anything more than a semi-educated guess about future events – or the way the investing world will interpret them. The same technical traders who look for new all-time highs to extend trends even further also like to use historical price action to come up with estimates. Economists and fundamental investors try to use geopolitical and macroeconomic data and events to identify keys and trends. I hesitate to say that any one approach is better than another. Instead, I like to consider a combination of a couple of different technical techniques, along with economic and, yes, even geopolitical conditions to try to come to my own opinion.

    I spent some time this morning going over some of that data, and here’s what my early conclusions are. Keep in mind, these are just a few of my own best attempts to make a semi-educated guess, so you can take it or leave it as you wish.

    Some Fuzzy Math

    I’ll start by giving you a look at a technical chart of the S&P 500.


    There are a couple of elements of this chart that I think are useful right now. The first is the Relative Strength (RSI) indicator shown in the lower portion of the chart. RSI is a sentiment and momentum indicator that oscillates between upper and lower extremes to gauge a trend’s strength and give traders a way to estimate the likelihood the trend will continue or reverse. At the upper extremes (above 70), reversal risk to the downside is increased, while at the lower extremes (below 30), the opposite is true. The other element that comes into play about RSI is that stocks will often continue to follow their current trend even as RSI hovers near, or even beyond extreme levels. That reality is what makes RSI interesting to me right now. Even as the S&P 500 is pushing near to the all-time high it set in January of this year, RSI remains just a little below its uppermost extreme. It has also managed to oscillate within its upper and lower extremes since that high was reached in January, with its general pattern of highs and lows since April closely approximating the pattern of the index. That is a confirmation of the market’s trend over the last four months, and the fact that the indicator still hasn’t pierced its upper extreme band suggests there could be more room to run.

    At this point, it’s worth taking a moment to discuss a basic tenet of trend-based analysis. Trends tend to move in what I like to think of as stages. Typically speaking, most long-term trends can be broken into three different stages. Stage 1 is the earliest portion of a trend, when the market begins to reverse from an extreme or high or low. That’s the hardest stage to recognize, simply because it moves against the grain of the current longer trend, when most people will simply see that counter move as a minor correction or pullback within that trend. Stage 2 is the longest portion of a trend, and the area where the most money is likely to be made. It’s where the new trend is easiest to identify, and so more and more investors jump on board in that direction, making it easier and simpler to maintain. Stage 3 is the latest stage of the trend, and what I like of as the “last gasp” stage of that long-term trend. There is often still quite a bit of room to move along the trend in this stage, and so this stage can still yield very profitable results; but it also means that reversal risk is greatly heightened during this stage.

    The challenge about the stages of a trend is predicting how long any given stage will last. Stage 2 can last 4 to 5 years in many cases, while Stages 1 and 3 are usually considerably shorter. The problem is that word – usually. I’ve been saying the market is in Stage 3 of its long-term upward trend for more than two years, which is undoubtedly longer than that stage should last. I maintain that attitude, however, simply because I think it is smarter to estimate conservatively; plan for the best, but be prepared for the worst. That means that I want to recognize and take advantage of upside opportunity when it’s there, but be ready and positioned to react quickly and effectively when the market reverses back the other way.

    If you operate on the idea that the market is in Stage 3, any upside that remains should be somewhat limited. That is where the “291.78 Total Distance” estimate I highlighted on the chart comes into play. Some people will take the total distance of the last market correction to estimate how far the market’s new opportunity will be after a new high is reached. I think it’s reasonable to use the total distance as a reference point, but I prefer to think in somewhat more conservative terms.

    Another technical method of market analysis that I have learned to appreciate over the course of my years in the market is Fibonacci analysis. It’s pretty fascinating to see how market trends, and their swings from high to low correspond with Fibonacci mathematics. Those calculations can also be used to estimate a market’s extension of a trend. Here’s what we get if we apply the .618 Fibonacci ratio to the total distance of the market’s correction from January to April of this year:

    291.78 X .618 = 180.32

    We can add this number (roughly 62% of the total size of the correction) to the last market high to get an estimate of how much further the market could run if the resistance from that high is broken.

    2,872.87 + 180.32 = 3,052.87

    180.32 / 2,872.87 = 6.27% total upside

    Forecasting broad market upside of about 6% if the market makes a new high seems like a pretty conservative estimate; if it is even remotely close to correct, that should translate to some pretty healthy gains on individual stocks. How long that kind of a run will take is anybody’s guess. I decided to look back at the last two bull markets to gauge how long Stage 3 of their respective long-term trends lasted.

    The bull market that ran from 2002 to 2007 hit a high point in October 2007 before beginning its reversal; the “last gasp”, final stage of that five-year trend began in August, meaning that Stage 3 in that case covered about a two-month period of time. Prior to that, the March 2000 high that marked the end of the “dot-com boom” started its “last gasp” push in February of the same year. Saying the market could move about 6% in one to two months isn’t unreasonable given the increased level of volatility we’ve seen from the market this year; but I also think it’s useful to think about how long it has taken the market to recover from its latest correction (assuming, of course, that a new high is actually made). The bottom came in April, so a conservative estimate could suggest that it may take between 2 to 4 months. That certainly implies the market’s trend could last through the rest of the year, or possibly even longer since my estimate intentionally errs on the conservative side.

    There are some important elements from a fundamental and economic view that I think support the idea the market has some room and reason to run a little longer. Earnings continue to come in generally strong, and most economic reports (jobs, housing etc.) are also showing pretty broad-based strength. A healthy economy should generally lend itself well to continued strength in the stock market. While interest rates are rising, the Fed has maintained a conservative pace and degree of those increases, and the economy seems to following that lead pretty well. As they currently stand, interest rates remain historically low despite the increases we’ve seen so far. That is also a positive, bullish indicator.

    There are risks to my forecast. Frankly, many come from the geopolitical arena at this stage. Trade war concerns are still on everybody’s mind, and the Trump administration’s reimposition of economic sanctions on Iran could put a cap on oil supply that could drive oil prices near to their historical highs. While corporate earnings have yet to really show a negative impact from tariffs between the U.S. and its trading partners, more and more CEO’s are starting to cite tariffs as a risk. If that risk starts to manifest itself in an actual deterioration of revenues, and of earnings, the market can be expected to react negatively. Increased oil prices, at the extreme, could have the net effect of muting demand for a wide range of goods all over the globe. Real estate prices in many parts of the U.S. have also been showing some remarkable increases over the last year or so as well, while wage gains have generally been quite muted; at some point, those increases, along with increasing interest rates could very well put home ownership – a big indicator of broad economic strength – out of the reach of the average working person.

    Is there good upside left in the market? I think there is. I also think we have to be careful to factor risk into our evaluation and our investment decisions. Be conservative and selective about how you jump into a new opportunity, and plan ahead about how long you intend to stay or how much gain you want to chase. Put a plan in place to limit your downside risk if you’re proven wrong and the market turns against you, and limit the size of the new positions you take.

  • 31 May
    U.S.-China tensions could force AMAT much lower

    U.S.-China tensions could force AMAT much lower

    Over the last several weeks, the threat of a trade war between the United States and China has put a lot of pressure on the broad market. Virtually every sector of the economy could be affected by U.S. tariffs More →

  • 30 May
    CVS looks poised for a big break out – here’s why

    CVS looks poised for a big break out – here’s why

    Looking for a new investment to make can be an intimidating process, no matter how experienced you may be as an investor. There are so many ways to go about doing it, how are you really supposed to know what method works best? More →

  • 13 Aug
    Sunday Edition: Wearing A Polo? You’ll Like This Buying Opportunity

    Sunday Edition: Wearing A Polo? You’ll Like This Buying Opportunity

    When reading about the fraught retail sector, I usually find myself wondering about how iconic American brands are doing. Those longstanding brands that really embody and define American style.

    This week had me thinking about Ralph Lauren (NYSE: RL).

    For several years, it has seemed that Ralph Lauren has been in the same boat with Michael Kors and Coach, with their products being found mostly at outlet malls and on discount racks at departments stores. More →