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Dr. Kris
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Dr. Kris has two degrees from MIT because one just wasn't enough. Her life goal was to figure out the universe and having done that (at least to her satisfaction), she decided to tackle something even more difficult—the stock market. Applying the scientific method along with an insatiably... More
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  • Betting On The Bettors

    Today's action in the major averages reflected the rotation out of recent tech (think newer internet companies) and biotech darlings along with other areas that have enjoyed a long run-up such as real estate and consumer discretionary (especially restaurants and casinos) and into the more staid industries such as regional banks, oil and gas producers and suppliers, gold miners, and insurance (see below for more info). Even Treasuries and muni bonds got a lift. It's worth noting that muni bonds have been making a steady comeback since December following last year's late spring sell-off.

    Betting on reinsurers
    Investors have already filled their dance cards with regular insurance companies, but now they're starting to take notice of of the wallflowers in this group--the reinsurers. Reinsurance companies provide insurance to insurance companies. Essentially, they are a form of risk management for the insurance company. One way reinsurers can make money is via arbitrage, either through economies of scale or tax advantages. It is because of the latter that most reinsurance companies are located off-shore. By purchasing bonds, such as investment grade corporates, they are able to take advantage of their tax-free situation.

    Several reinsurers have popped up on my radar screen. They all pay dividends, albeit small ones (yields less than 2%), but it's their charts and P/E ratios that are their most attractive features. They all deserve a look:

    Everest Re (RE, $161): P/E 6.3, Yield 1.9%. The stock broke out of a 5 month base today on heavier than normal volume.
    Renaissance Re (RNR, $102): P/E 6.8, Yield 1.1%. The stock broke through overhead resistance on 4/8. It broke short-term resistance today.
    Montpelier Re (MRH, $31): P/E 8.7, Yield 1.6%. The stock went into the green on St. Pat's day (3/17). It spent a few weeks consolidating until the bulls finally got the upper hand it began powering higher.

    From a technician's point of view, these all look like winners.

    Apr 23 10:31 PM | Link | Comment!
  • Market Notes: Autos & Semis Keep On Truckin' -- April 1

    The S&P 500 and the market leading Dow Transport Index (DTX) were both finally able to break out of a month long consolidation range to hit new all-time highs. The Dow Industrial Index (DJIA) is retesting its all-time high put in a couple of months ago while the tech heavy Nasdaq and small-cap driven Russell 2000 (RUT) both sharply rebounded from a recent sell-off. The question now is how much steam do the bulls have to propel the move higher?

    Looking at the VIX may provide us with a clue. The volatility index, a measure of fear and uncertainty, dropped nearly 6% today showing that investors are becoming more confident. Although the VIX closed just above 13--a very low value by historical measures--it still has a ways to go before contrarians become concerned. In the past year or so, the VIX has shown that it can stay at very low levels (in the 12-14 range) for a month or so before rebounding. If history is planning on repeating itself, we may not see the market sell off for at least another month, just in time for the "Sell in May and go away" scenario to kick in. Let's keep our fingers crossed that today's pop wasn't just an April Fool's joke by the bears wearing bull horns.

    Today's hot stocks: Autos & semis deliver the goods
    Two industry groups in particular were on fire today--the auto makers and auto part makers and the semiconductors. One would think that with GM's CEO Mary Barra getting grilled by Congress today would cause the auto stocks to crash and burn (like some GM cars), but it seemed to have the opposite effect. In fact many motored to new highs: Tower (TOWR, $29), Autoliv (ALV, $102), Delphi (DLPH, $70), Lear (LEA, $87), Superior (SUP, $21), Magna (MGA, $99), Thor (THO, $64), Tata Motors (TTM, $36), Fiat (FIATY, $12). Most of these have P/Es in the 15 - 25 range with Fiat and Tata being the lowest (11 & 14 respectively), and most pay a dividend with Superior and Autoliv having the highest yields at 3.5% and 2.1%. Technically, all of the above charts are compelling but I especially like Fiat's as it today pistoned out of a three year base--a very bullish indication.

    The semiconductor etfs, SOXX and SMH, have been rallying juggernauts and today they both broke out of recent consolidation to hit new highs, gaining roughly 1.5% on the day. Helping these etfs along were some individual names, each popping at least 3% to new highs themselves: Tower Semi (TSEM, $10), Rambus (RMBS, $11), Lattice Semi (LSCC, $8), Micrel (MCRL, $12), Spansion (CODE, $18), Amkor (AMKR, $7), NXP Semi (NXPI, $61), Linear Tech (LLTC, $50), Freescale Semi (FSL, $25). Many of these names have been moving up for a while and still don't show signs of slowing down. Note that the rally in the semis helped the Tech etf (XLK) move past current resistance to yet another new high--just the fuel the market needs to continue moving up.

    Apr 01 6:16 PM | Link | Comment!
  • Market Notes: Old Is The New New -- March 31

    The bulls charged back today amid a lot of end-of-quarter rotation and portfolio window dressing. Possibly fearing that a market correction is in the offing, fund managers have been aggressively dumping current hi-fliers concentrated mostly in the "new" tech and the biotech areas. High P/E names such as Netflix (NFLX, P/E = 180), Linkedin (LNKD, P/E = 770),and Amazon (AMZN, P/E = 560) have suffered massive outflows in favor of "boring" industry groups such as food producers, transportation, "old" media (hey, the New York Times (NYT) broke out to a new high today!), "old" tech (we'll get to those in a moment), and utilities.

    Speaking of utes, the Utilities etf (XLU) popped to a new high today hitting a level not seen since before the 2008 recession. And why not? With reasonable P/Es and decent dividends, they won't face much competition as sources for reliable income until bond rates go up. And from what Janet Yellen said today, she's not anticipating on hiking rates soon. Here's a list of utes hitting new highs today in order of decreasing dividend yield (%): AVA ($30.65, 4%), PEG ($38.14, 3.9%), VVC ($39.39, 3.7%), LNT ($56.81, 3.6%), DTE ($74.29, 3.5%), NWE ($47.43, 3.4%), WEC ($46.55, 3.4%), EIX ($56.61, 2.5%), ITC ($37.35, 1.5%). Technically, Wisconsin Electric (WEC) sports the most compelling chart, but because I'm a Cheesehead I may be a slightly biased in my opinion. The XLU is also a good choice and pays a nice dividend, too (3.6%).

    Food and beverage producers also had a good day. Breaking out new highs recently: Diamond Foods (DMND, $34.93), Constellation Brands (STZ, $84.97), Pilgrim's Pride (PPC, $20.92), Tyson Foods (TSN, $44.01), Hormel (HRL, $49.27), Cal-Maine Foods (CALM, $62.78), Pinnacle Foods (PF, $29.86). Of these, Constellation (STZ) is my choice--it sports the best chart and has a reasonable P/E of 8.5 (but it does not pay a dividend as some of the others do).

    Old-guard tech names such as Microsoft (MSFT) and Oracle (ORCL) have been on the come-back trail in recent months. Today, Mr. Softee broke out of a fourteen year base on slightly heavier than normal volume. Apparently, investors as well as Wall Street analysts are liking the changing of the guard in senior management along with a refocusing of company efforts on cloud computing and mobile strategies. Oracle, too, blew through recent resistance on 3x volume to hit a level also not seen since 2000. Compared with the tech stocks mentioned above, the P/E's of these two stocks are more down-to-earth--15 for MSFT and 17 for ORCL. I rate both of these stocks as Buys and if I had to pick just one, it would be Microsoft for its more bullish chart and for its higher paying dividend--2.7% compared with 1.2% for Oracle. And if a market correction is in the cards, both of these stocks should be able to weather it well.

    Mar 31 7:17 PM | Link | 1 Comment
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  • Betting On The Bettors $RE, $MRH, $RNR
    about 8 hours ago
  • Intraday support/resistance: $SPX 1874/1881, $DTX 771.75/779.25, Nasdaq 4123.5/4161.5, $RUT 1148/1156; $VIX 13.15/13.75
    about 16 hours ago
  • Intraday support/resistance: $SPX 1872.5/1887.5, $DTX 768.75/777.25, $DJIA 16450/16580, Nasdaq 4131/4175, $RUT 1143/1163; $VIX 12.75/13.25
    1 day ago
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