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Charles Payne
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Wall Street Strategies has been providing independent stock market research since 1991 to individual, retail and institutional clients through a balanced approach to investing and trading. Charles Payne, our founder and chief analyst, is routinely sought after for his stock market, political,... More
My company:
Wall Street Strategies, Inc.
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Be Smart, Act Fast, Get Rich
  • Breakouts...and Liftoff - By Charles Payne

    I know on the surface, it feels boring, but beneath the surface, things are bubbling. In fact, several parts of the market are on the cusp of breaking out and one key measure is breaking down.

    The NASDAQ is back at its all-time high; forming a double top which is typically a bearish chart formation that would make a breakout monumental. A close above 5,100 could trigger a longer-term move that left the index at 400 points.

    Interestingly, a lot of the standout momentum names were slightly lower yesterday. If they reload and play a role, it could be huge. However, it's unlikely it will happen today with so many investors packing it in for a four-day weekend.

    This has been a dull and uneventful market, but it's been resolved and the bias has been to the upside. It stands to reason that the most stealth and unloved rally in history could silently set-up for a major leg higher.



    Oil has regained its upward climb as drawdowns have replaced builds. Perhaps, the anxiety of the shorts, coupled by the pending summer driving season could provide the breakout catalyst.


    While stocks and commodities are on the verge of breakouts, the Market Volatility Index (VIX) has slipped to a 2015 low, and it happens to be down 44% in the past three years. The so-called fear index has been dormant and devoid of fear. Some experts say that in and of itself is a red know, too complacent or too cocky. I'm no longer sure that's how one reads this index anymore. For me, with its gauge spikes, we should become more fearful.


    After the close-Hewlett-Packard (NYSE:HPQ), Intuit (NASDAQ:INTU), and Ross Stores (NASDAQ:ROST) all beat on the bottom line and the initial reaction was for the stocks to begin trading higher in the aftermarket. All signs point toward a major breakout to the upside, even if they're not written in neon lights.

    Today's Session

    The Bureau of Labor Statistics (BLS) released the April inflation results this morning. For the month, the consumer price index increased by 0.1% month-over-month, in line with consensus, but at a slower pace than March where the index gained 0.2%. On an annual basis, inflation is down 0.2% in April after remaining unchanged in March. The major markets initially held strength following the news, later tanked before the open. Fed Chair Janet Yellen is scheduled to speak this afternoon, so we may continue to see some volatility during the session.

    May 22 10:04 AM | Link | Comment!
  • The Big Fish Slips Away - By Charles Payne

    Although there is a new sheriff, it's the same old story. Described as a "Brazenly display of collusion," the U.S. Attorney General (NYSE:AG) Loretta Lynch got five Wall Street banks to admit their guilt in the manipulation of the currency market. As a result, those firms will fork over $5.7 billion to the Federal Reserve and Justice Department. If you were caught up in the emotional swing of that period that began in 2007, it's doubtful that anyone will make you whole or even partially mend the economic damage to your wallet.

    So, we got a new AG, but the same old "justice" where banks pay off exorbitant fines with shareholder funds, and no one goes to jail.

    On the contrary, not only does no one have to go to jail, but also, when Wall Street can't use shareholder funds, it has access to the Federal Reserve money (always freshly printed) and taxpayer bailouts. Don't buy into the hype that the bank bailout was successful. Close to $35 billion was written off and billions were redirected to large lumbering agencies ostensibly to control the collection of payments. In the meantime, the cash keeps rolling in.

    Wall Street Bank Fines and Penalties 2009 through 2014:



    Bank of America

    $61.2 billion


    $31.5 billion


    $10.1 billion


    $9.0 billion

    Credit Suisse

    $2.5 billion

    Wells Fargo

    $5.8 billion


    $1.9 billion

    Deutsche Bank

    $1.9 billion

    Morgan Stanley

    $1.3 billion


    $733 million


    $780 million


    $600 million


    $619 million

    Just Us?

    While many people know me as the stock guy, I'm really the empowerment guy who believes Americans can improve their lives because we have a system that rewards hard workers, risk-takers, and visionaries.

    I'm also a law-and-order guy who believes in the death penalty, along with severe and harsh sentences for crimes that leave psychological and mental destruction. However, with our legal system, too many young Americans are tossing in the towel on all aspects of society and opportunities.

    I want to reiterate that yesterday, five Wall Street banks were fined close to $6 billion and no one went to jail. Since 2009, Wall Street firms have been fined more than $130 billion. It's clear they use shareholders money to pay exorbitant fines and even get bailouts to stay in business, only to pay fines later.

    What about the rest of Americans who find themselves in trouble for criminal activities, with fines costing less than billions of dollars?

    Prison Facts

    • 2.3 million prisoners
    • $24,000 spent per year
    • 4.4% in U.S. population

    I know that many people try to blame the boom in prison population on big business, but corrections unions have played the biggest role. To be more exact, the corrections union came up with the 'Three-strikes' law in California and it became a perpetual motion machine. The more prisons they build, the more powerful they become.

    This is an issue that isn't going away. On the other hand, watch for the felon voting rights movement to launch into another gear. Young Americans need to buy into the criminal justice system as one of the pillars that made America the greatest nation on the planet. That means a few tweaks have to occur or maybe they should start locking up people that steal billions like someone that steals a color television.

    • It's a moral dilemma
    • It's an economic story and a challenge

    The Fed

    Concerns over the Fed has pushed and pulled the market for a couple of years. Yesterday wasn't any different. The pushing and pulling lacked oomph, leaving the market reality flat at the close. Coming into the session, experts felt that there was a 73% chance of a rate-hike in September. Although I'm banking on it being moved to next year, that's probably where the number is today.

    Not that I want that to happen; moreover, I wish the economy were healed enough to get the Fed out of the picture today.

    Today's Session

    Interesting bifurcation in retail. Dollar Tree is down on earnings while William Sonoma is soaring higher. Could this actually be a good sign for the economy? Are people moving up the retail food chain? It remains to be seen, plus a lot of William Sonoma's beat were related to expectations.

    The initial jobless claims four-week moving average came in at the lowest point since April 2000 at 266,250. This level is over 20,000 less than the amount observed in the April 18th week and raises optimism for the May employment report.

    May 21 10:13 AM | Link | Comment!
  • Benevolence Of The Wolves Of Wall Street - By Charles Payne

    Although the market is in the midst of breaking out with the Dow Jones Industrial Average and S&P 500 hitting all-time highs, Wall Street is becoming antsy and wants to share those feelings with everyone else.

    Recent comments and actions were akin to screaming 'Fire' in a crowded theater.

    "The world economy is like an ocean liner without lifeboats. If another recession hits, it could be a truly titanic struggle for policymakers." -Stephen King, HSBC

    "Investors remain trapped in "The Twilight Zone," the transition period between the end of QE and the first rate hike by the Fed, the start of policy normalization." -A note from Bank of America.

    Yesterday morning, Goldman Sachs downgraded 19 stocks while upgrading only 9 stocks. It wasn't the only firm in the mood to lower its ratings on a myriad of stocks, either. The question for me is why? I honestly do not think HSBC, Bank of America, or Goldman Sachs has told their institutional investors to sell everything and head for the hills.

    So, why are they inciting such action on Main Street?

    I guess the market has rallied for so long without a real or even a minor hiccup that it's been an easy soapbox to climb. The scores of bears have been wrong for years and still claim they're making money. (Yes, they're long, even though they've warned you to stay out for 12,000 Dow points.) Let fundamentals and market action speak to you more than the masters of the universe who share their fears.

    Apparently, the very same masters are having a tough time keeping up with the Jones, Smiths, and Robertsons, etc. Many hedge funds are folding tents and others are trying to find complex ways to make money. Check out all the factors that now go into the quant witches' brew. It doesn't have to be this complicated, but I suspect that's how you keep getting millions to manage even as you underperform.

    Today's Session

    The pulse of Main Street, as measured by retail sales and the housing market, are once again sending mixed messages, but the same mixed messages.

    Wal-Mart lays an egg as overall revenues were slightly lower as total revenue in the US came in better than total international revenue, however, it was still disappointing. The company saw US revenue of $70.2 billion which is up 3.5% year-over-year, but operating income of $4.6 billion, a decrease of 6.8% year-over-year and operating margin contracted to 6.6% from 7.3%. I suspect the moral of this story is that cheap is ubiquitous and somehow the company has to find ways to boost traffic and sales.

    Home Depot on the other hand had a dream quarter, driven by what management is calling a "stronger than expected spring." Same store sales +7.1% as revenues of $20.89 billion were a 6.1% improvement. Additional metrics:

    • Average ticket $58.60 from $57.59, +1.8%
    • Number of transactions 360.2 from 344.5, +4.6%
    • Sales per square feet $353.70 from $334.01, +5.9%

    The moral of the story is we love our homes and want to spruce them up.

    Speaking of homes, housing permits and starts both came in above consensus this morning.

    • April Starts 1,143,000 (annualized); consensus 1,065,000
    • April Permits 1,135,000; consensus 1,019,000

    Ironically, the strong data from the housing sector spooked the market with renewed rate hike jitters. More important to me as results at TJ Max which beat on the top and bottom lines and upped guidance. Be that as it may, the street just has no clue how to handle the first rate hike. On one hand, selling to avoid a short-term dip will look really dumb and the vast majority of money managers have underperformed so much in recent years that this isn't the time to look like a rookie.

    Then again, preserving slim gains could make the average money manager look like a superstar at the end of the year. This has become a game of inches.

    May 19 9:39 AM | Link | Comment!
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