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April 18, 2016
Market Strategies Newsletter
Sample Issue
Balanced Investing Strategies To Make Money
In Up Or Down Markets
A Publication of Princeton Research, Inc. (www.PrincetonResearch.com)
Contributing Staff: Michael King, Charles Moskowitz
Where To Invest In 2016 Newsletter Covering:
Where to Invest April 2016
Best Stocks To Buy April 2016
Stock Market Investing Strategies
Stock Options Trade Alerts
Options Trading Strategies
How To Trade Options
Proven Profits Trading Success
Results From Our Recent Trade Alerts:
365% Profits on SIG Puts in 10 Days
207% Profits on SIG Puts in 6 Days
70% Profits on GLD Calls in 1 Day
50% Loss on QQQ Puts in 5 Days
50% Loss on GLD Calls in 15 Days
207% Profits on SIG Puts in 6 Days
48% Profits on BA Calls in 2 Days
50% Loss on JPM Calls in 3 Days
41% Profits on XLF Calls in 6 Days
54% Profits on JPM Calls in 1 Day
29% Profits on JPM Calls in 8 Days
Join Today to Start Getting Profits Like These.
We Do The Analysis Work
We Send You The Trades
You Make The Trades
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$10,000 Trading Portfolio
Charles Moskowitz Discussion
There is one position:
Long 4 QQQ May 109 Puts
Funds in Use = $ 616
This Always Ends Badly, But When ??
So, here’s my conundrum; all the world governments are working to print as much money as they can, to debase their currencies as fast as they can, and as it says above, this always ends badly. Google “history of fiat money” and you’ll see what that means. The problem is that the whole world has all of this cash sloshing around in the markets, driving up asset valuations, including bonds, and everyone is chasing returns and yield.
As we saw after the December rate hike, the markets don’t really like the rising rates since it’s pure math, bond yields go up when prices go down. Bonds, even the “safest”
Treasuries are already out there in the market and if you buy them with a 2% yield, and rates advance, those bonds are losers. When return on capital becomes less important than return of capital, all hell breaks loose. No one is immune to this scenario since it affects the banks, their 401Ks, and asset values across the board.
The issue is when. The scenario has been playing out now for quite a while in the US, and with the EU following in our footsteps, as well as China and the rest of Asia, how far off can it be? The old traders saying’ “the market can remain irrational a lot longer than you can remain solvent,” certainly comes to mind.
With the exception of the Transports, the news this week was bad; retail, non-durable manufacturing, industrial production and capacity utilization, and minor earnings of dramatically lowered projections from some of the financials. All those financial beats occurred (as usual) on layoffs and cutbacks, accompanied by revenue misses. And yet, the market continued higher. It’s tough to fight the fed…
We will continue to try to make low risk trades in both directions with close stops…..CAM
Market Strategies $10,000 Trading Account Trade Table
DATE | TRADES | PRICE | COST | PROCEEDS | RESULTS |
04/15 | Bought 4 QQQ May 109 Puts | 1.54 | 616 | ||
04/13 | Sold 6 QQQ April 108.50 Puts
( 50 Loss Rule ) |
0.36 | 216 | 216 Loss | |
04/13 | Sold 4 GLD April 119 Calls
( 50% Loss Rule ) |
0.41 | 164 | 160 Loss | |
04/11 | Sold 2 SIG April 120 Puts | 6.50 | 1300 | 1020 Gain | |
04/08 | Bought 6 QQQ April 108.50 Puts | 0.72 | 432 | ||
04/07 | Sold 2 SIG April 120 Puts
( 100% profit Rule + Gap ) |
4.30 | 860 | 580 Gain | |
04/01 | Bought 4 SIG April 120 Puts | 1.40 | 560 | ||
03/29 | Sold 4 GLD April 119 Calls | 1.38 | 552 | 228 Gain | |
03/28 | Bought 8 GLD April 119 Calls | 0.81 | 648 |
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New Trades Options Account:
( 1 ) Buy 4 SJM May 125 Puts @ $ 1.45
( 2 ) Buy 4 FXE June 109 Puts @ $ 1.16
NEW Trades $ 100,000 account :
( 1 ) Buy 8 SJM May 125 Puts @ $ 1.45
( 2 ) Buy 8 FXE June 109 Puts @ $ 1.16
( 3 ) Buy 500 NVAX @ Market
MARKET Laboratory – Weekly Changes
Prices are copied from Barron’s Weekly and Yahoo Finance and may be incorrect
Dow
17,897.46 +320.50 +1.82% |
Nasdaq
4938.22 +87.53 |
S&P 500
2080.73 +33.13 +1.62% |
Transportation
7978.23 +241.95 +3.13% |
Russell 2000
1130.92 +33.61 +3.06% |
Nasdaq100
4543.16 +68.24 +1.52% |
Gold (spot)
1233.10 -9.40 -0.8% |
Silver
1631.3 +92.9 +6.0% |
Crude
40.36 +0.64 +1.6% |
Heating Oil
123.22 +3.18 +2.7% |
Unleaded Gas
1.4612 -0.0025 -0.2% |
Natural Gas
1.902 -0.088 -4.4% |
VIX
13.62 -1.74 -11.3% |
Put/Call Ratios
S&P 100 137/100’s +19/100’s |
Put/Call Ratios
CBOE Equity 65/100’s -3100’s
|
Bonds
166-04 -0.02 2.56%+0.01% |
10 Yr. Note
131-204-126 1.75%+0.03%
|
Copper
215.30 +6.60 +3.2% |
CRB Inflation
Index 173.64 +2.60 +1.5% |
Barron’s* Confidence
68.1 -0.1 |
S&P100
923.97 +14.94 +1.64% |
5 Yr. Note
121-077 -075 1.21% +0.05%
|
Dollar
94.71 +0.52 +0.6% |
DJ Utilities
662.50 +2.39 +0.36% |
AAII
Confidence Index
Long Term Average |
Bullish
27.8% -4.4%
38.74% |
Bearish
24.9% +3.4%
30.30% |
Neutral
47.3% +1.0%
30.96% |
M1 Money
Supply +4.60% Apr 4th
|
M2 Money
Supply +5.65% Apr 4th
|
* Component Change in the Confidence Index
M1…all money in hands of the public, Time Deposits Traveler’s Checks, Demand Deposits
M2.. adds Savings and Money Market Accounts both compared with the previous year.
Market Strategies Technical Information
Support/Resistance Levels: SUPPORT RESISTANCE
S&P 500 2038 2097
Dow 17,550 18,063
QQQ 107.10 111.70
Transports 7625 8055
NASDAQ 4740 50.38
The DJT finally closed above its 200-day moving average.to lead the indexes higher. Keep an eye on volatility. The UVXY needs to remain at these lower levels for the rally to continue. If the UVXY rallies the indexes will decline. The Russell is the only index still below its 200-day m.a.
$100,000 Trading Portfolio
Stock Positions and Trades
Each stock is allocated a theoretical $ 5,000 share of the portfolio unless otherwise indicated.
Stock
|
Purchase Price | Purchase Date | Stop/Loss | Price/
Date Sold |
Profit/
(Loss) |
||
SCO 20 | 109.88 | 04/12 | |||||
UVXY 100 | 20.66 | 04/11 | 19.69 04/12 | ( $ 103 ) | |||
UVXY 100 | 22.09 | 04/07 | 19.69 04/12 | ( $ 240 ) | |||
XLF 200 | 22.25 | 03/24 | |||||
SUN 300 | 29.50 | 02/23 | Sold 3 32.50 Calls | $ 900 credit | |||
STNG 500 | 6.02 | 02/22 | |||||
EYES 1000 | 6.49 | 12/28 | |||||
APC 100 | 51.21 | 12/10 | |||||
APC 100 | 53.53 | 12/07 | |||||
LVLT 100 | 50.81 | 11/23 | |||||
TWTR 200 | 28.51 | 10/28 | |||||
MOS 100 | 43.55 | 08/14 | |||||
NBGGY 600 | 1.40 | 02/17 | |||||
BAC. Wts 5,000 lots | 0.7411 | 12/26 | |||||
BSBR 500
500 |
4.84
3.75 |
12/18
|
|||||
SAN 600 | 8.40 | 12/16 | |||||
AA 500 | 14.21 | 10/16 | |||||
NBGGY 300 | 2.95 | 05/19 | |||||
NBGGY 300 | 4.08 | 8/12 | |||||
TEXQY* 200 | 6.56 | 7/11 | |||||
REPR* 5000 | 0.22 | 10/22/12 |
SCO means Stop Close Only
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For those of you who do not buy puts to protect your portfolio, there are many ETF’s that are the inverse of the DOW. The symbols are DOG, DXD, SDS,TZA and RWM, which go up when the DOW, S&P 500 and Russell 2000 go down and down when they go up. The DZZ goes up double when gold goes down.
Market Strategies $100,000 Trading Account
There were three closed option positions:
QQQ April 108.50 Puts were sold for a loss of $ 432
GLD April 119 Calls lost $ 320.
The remaining half of the 8 lot SIG position was sold for a gain of $ 2040.
The net gain in options was $ 1288.
There were two closed out stock positions:
2 UVXY positions 100 lots bought at 20.66 and the other at 22.09 were sold at $ 19.69 for a loss of $343.
The result for the entire week was a net gain of $ 945.
For the entire year on closed out trades, our profits increased to $14,544.
The options expire on the third Friday of each Month unless otherwise posted.
The Stock table has the following 21 positions:
AA, APC(2), BAC.B.WS, BSBR( 2 ), EYES, LVLT, MOS, NBGGY (3), REPR, SAN, SCO, STNG, SUN, TEXQY, TWTR, XLF, short 3 SUN Calls
The options call for a $ 2,500 investment unless otherwise stated; each stock position requires $5,000 unless otherwise mentioned specifically.
We are basing money management on a hypothetical $ 100,000, using a total of $75,885
for the 20 open long stock positions plus a credit of $900 for the SUN written Calls, which reduces the requirement to $ 74,985. The Open Option Positions require $ 1,800.
This increases the margin requirement to $ 76,785, leaving $ 23,215 in cash.
These figures are approximate and there might be errors.
We have not counted the dividends received from many previous trades such as Apple, Colgate Palmolive, JP Morgan, North American Tankers, STNG, Santander, which pays over 5%, their Brazil affiliate BSBR and Blue Capital Reinsurance which was sold for a profit and many others.
The trading is hypothetical and we do not count commission costs.
Executions that have occurred at or near the open or close of trading sometimes vary from our actual numbers. For example, when something opens down and it is through our price, we take the next trade whether it is an uptick or continues lower. This sometimes results in a 50% trade that is slightly above or below the exact number.
Previous Week’s Recommendations and
Rules for the Market Strategies
$100,000 Portfolio Trading Account
- All options count for about $ 2,500.00 for model portfolio calculations unless
otherwise stated
- When the option has doubled sell half the position
- Stop Loss protection is either half or offered with each trade
- The cost of the option is the asking price (or the price between the bid and ask,
whichever is more realistic)
- The options will be followed until closed out.
- Option Symbols are stock symbol with expiration month and strike price
Option | Cost | Date | Sold | Date | Profit/
(Loss) |
QQQ April 108.50
12 lots |
Puts
0.72 |
04/08/16 | 0.36
( 50% Loss Rule ) |
04/13/2016 | ( $ 432 ) |
SIG April 120
8 lots
Leaves 4 lots |
Puts
1.40 |
04/01/16 | 4.30
Sold Half on 100% Up Rule
6.50 Sold Balance |
04/07/2016
04/11/16 |
$ 1160
$ 2040 |
GLD April 119
16 lots
8 lots left open |
Calls
0.81 |
03/28/16 | 1.38
Sold Half
0.41 Sold Balance 50% Loss Rule |
03/29/2016
04/13/2016 |
$ 456
( $ 320 ) |
SUN June 32.50
3 lots written |
Calls
|
3.00 | 02/23/2016 | $ 900 credit
Covered write |
This Weeks’ Economic Numbers
Earnings Releases and Media Data
Before the Open on top of the Row;
After the close below the Economics Information
MONDAY | Morgan Stanley MS ( 0.47 vs 0.85 ) PepsiCo PEP ( 0.81 vs 0.83 ) JB Hunt Transportation
JBHT ( 0.85 vs 0.78 ) Grainger GWW ( 2.84 vs 3.10 ) M&T Bank MTB ( 1.88 vs 1.65 )
10:00 hrs NAHB Housing Market Index April ( 59 vs 58 ) The deadline for bids on Yahoo’s internet business. Those interested are reported to be Verizon, Alphabet, Softbank, Time and the U.K.’s Daily Mail.
IBM IBM ( 2.09 vs 2.91 ) Netflix NFLX ( 0.03 vs 0.77 ) Celanese CE ( 1.49 vs 1.72 ) Sanmina SANM ( 0.56 vs 0.50 ) Brown and Brown BRO ( 0.42 vs 0.40 ) Eagle Lifestyle Properties ELS ( 0.89 vs 0.83 ) IDEC Corp IEX ( 0.81 vs 0.84 ) Wintrust Financial WTFC ( 0.74 vs 0.76 ) |
TUESDAY | Goldman Sachs GS ( 2.63 vs 5.94 ) Genuine Parts GPC ( 1.03 vs 1.05 ) Harley Davidson HOG ( 1.29 vs 1.27 ) Johnson and Johnson JNJ ( 1.65 vs 1.56 ) Phillip Morris International
PM ( 1.11 vs 1.16 ) Omnicom OMC ( 0.87 vs 0.83 ) United Health UNH ( 1.72 vs 1.46 )
The Senate Banking Committee holds a hearing on Iran sanctions.
N.Y. holds presidential primaries
08:30 hrs Housing Starts March ( 1170 vs 1178 ) 08:30 hrs Building Permits March ( 1200 vs 1167 )
Discover Financial Services DFS ( 1.29 vs 1.28 ) Intel INTC ( 0.47 vs 0.41 ) Interactive Brokers IBKR ( 0.43 vs -0.22 )VMware VMW ( 0.84 vs 0.86 ) Yahoo YHOO ( 0.07 vs 0.15 ) |
WEDNESDAY | ABB Ltd ABB ( 0.30 vs 0.31 ) Abbott Labs ABT ( 0.39 vs 0.47 ) Coca-Cola KO ( 0.44 vs 0.48 )
Illinois Tool ITW ( 1.26 vs 1.21 ) Nielsen NLSN ( 0.50 vs 0.46 ) St Jude Medical STJ ( 0.89 vs 0.93 ) TE Connectivity TEL ( 0.89 vs 0.91 ) Textron TXT ( 0.54 vs 0.46 ) EMC EMC ( 0.33 vs 0.31 ) Amphenol APH ( 0.57 vs 0.57 ) U.S. Bancorp USB ( 0.76 vs 0.76 ) President Obama attends a summit in Saudi Arabia of the Gulf Cooperation Council. 07:00 hrs MBA Mortgage Index 04/16 ( NA vs +10% ) 10:00 hrs Existing Home Sales March ( 5.30M vs 5.08M ) CORE PPI ( +0.2% vs 0.0% ) 10:30 hrs Crude Inventories 04/16( NA vs +6.634 Mln Bbls ) American Express AXP ( 1.34 vs 1.48 ) Las Vegas Sands LVS ( 0.62 vs 0.66 ) Kinder Morgan KMI ( 0.18 vs 0.58 ) Landstar LSTR ( 0.68 vs 0.67 ) Newmont Mining NEM ( 0.18 vs 0.35 ) Qualcomm QCOM ( 0.97 vs 1.40 ) Steel Dynamics STLD ( 0.24 vs 0.17 ) Tractor Supply TSCO ( 0.46 vs 0.42 ) United Continental UAL(1.17 vs 1.52 )United Rentals URI 1.19 vs 1.34 |
THURSDAY | Alaska Air ALK ( 1.41 vs 1.12 ) Amer Electric AEP ( 1.16 vs 1.28 )Biogen BIIB ( 4.45 vs 3.82 )
Danaher DHR ( 1.03 vs 0.93 ) Gen Motors GM ( 1.00 vs 0.86 ) Ericsson ERIC ( 1.23 vs 0.77 ) Johnson Controls JCI ( 0.82 vs 0.73 ) Manpower MAN 0.93 vs 0.83 Nucor NUE 0.27 vs 0.21 Quest Diagnostics DGX ( 1.12 vs 1.05 ) Royal Caribbean RCL ( 0.32 vs 0.20 ) Sherwin Williams SHW 1.61 vs 1.38 Southwest Air LUV 0.84 vs 0.66 Travelers TRV ( 2.54 vs 2.53 ) Pulte PHM ( 0.20 vs 0.15 ) Union Pacific UNP 1.10 vs 1.30 Verizon VZ ( 1.06 vs 1.02 ) 08:30 hrs Philadelphia Fed April ( +9.9 vs +12.4 ) 08:30 hrs Initial Claims 04/16 ( 263K vs 253K ) 08:30 hrs Continuing Claims 04/09 ( NA vs 2171K ) 09:00 hrs FHFA Housing Price Index Feb ( NA vs 0.5% ) 10:00 hrs Leading Indicators March ( + 0.4% vs +0.1% ) 10:30 hrs Natural Gas Inventories 04/16 ( NA vs -3 bcf ) Alphabet GOOG ( 7.96 vs 6.57 ) Microsoft MSFT ( 0.64 vs 0.61 ) Starbucks SBUX ( 0.39 vs 0.33 ) Schlumberger SLB ( 0.40 vs 1.06 ) Visa V ( 0.66 vs 0.63 )Sketchers SKX 0.54 vs 1.10 |
FRIDAY | American Airlines AAL ( 1.17 vs 1.73 ) AutoNation ( 0.93 vs 0.97 ) General Electric
GE ( 0.19 vs 0.31 ) Honeywell HON ( 1.50 vs 1.41 ) McDonald’s MCD 1.16 vs 1.01 08:30 hrs Empire Manufacturing April ( + 2.3 vs +0.6 ) 09:15 hrs Industrial Production March ( 0.0% vs -0.5% ) Capacity Utilization March ( 75.5% nvs 76.7% ) 10:00 hrs Michigan Sentiment April ( 92.0 vs 91.0 ) 16:00 hrs Net Long Term TIC Flows Feb ( NA vs -$ 12.0Bln ) U.S. Oil Rig Count fell 8 to 354, US Crude prices rose 6.6%; Brent prices shot up 6.4% BP shares were up 3.5%; Royal Dutch Shell RDSA climbed 4.2%; Chevron gained 1.6%; Exxon Mobil rose 1% |
Market Strategies Fundamentals
The DJ Transportation Average had a big week catapulting through its 200 -day price moving average
to 7,978, a gain of 242 points or 3.13% and leading all indexes higher. The Russell was the second best performing index rallying 33.61 points or 3.06% and still the only major stock index remaining below its 200 day moving average.
The dollar had a little bounce up 0.6% holding a key area of support, the 94.00 area, and causing gold to pull back somewhat losing $ 9.40 on the week or -0.8% to $1,233.10. Dollar weakness is needed to help buoy stocks and especially the Transportation average, which had been set back by dollar strength, to keep the indexes moving higher. We are in a period where bottom-up expectations have grown increasingly pessimistic over the past three months. Corporate profits are down for a fourth consecutive quarter for the first time since the last recession. Profits generated from S&P 500 companies are still expected to fall over 9% which would be $ 26.28 per S&P 500 share for the quarter.
or a PE of 19.8. In the past, a top has been in when the S&P has gotten to a 20 PE.
The Dow gained 320.50 to 17,897.46 its best close since November 4th. The Nasdaq added 87.53 points to 4938.22, still struggling to regain the 5000 level and close the downside gap from December 31st to January 4th, when the index collapsed. The S&P 500 gained 33 points to 2080.73 or plus 1.62%.
A rally in bank shares and reassuring news about China’s economy helped the major indexes. Both JP Morgan ( JPM: $ 61.87 ) + $ 4.13 or + 7.2% and Bank of America ( BAC: $ 14.09 ) + $ 1.21 or + 9.4% shares rallied sharply as both their earnings and announcements were better than expected.
JPMorgan Chase (JPM), reported earnings that beat expectations, but total revenue was down 3% and earnings actually declined 6.7%. They did beat the obviously low expectations of The Street, but it was mostly due to cost cutting measures. Bank of American (BAC) reported a 6.7% drop in revenues and a 13% decline in earnings despite a 6.4% drop in expenses. Loan-loss provisions increased at both banks. Both reports seemed to lack any real catalyst for their recent share price strength other than they were not as bad as expected. Negative year-over-year results, mixed data and tepid growth could halt the rally at any point.
A key for the stock market rally to continue will be a weakish dollar. The greenback seems to have found short term support at the 94 level.
U.S. Treasuries recovered Friday upon the release of weaker-than-expected U,S. economic data. The one bright spot for the U.S. was the April Empire State manufacturing index, which has been moving higher with the other regional manufacturing surveys after some very poor showings in 2015. Industrial Production and Capacity Utilization releases were much worse than expected as was the Michigan Sentiment Index. The index fell to 89.7 in April from 91.0 in March, missing the Briefing.com expectations for an advance to 92.0. The current conditions index fell to 105.4 from 105.6 and the expectations index fell to 79.6 from 81.5. The Barclays ETF ( TLT 132.05 ) +04 for the week had been much lower until the economic release and are now in striking distance of the Feb highs at the 133 level.
The decline in gasoline stocks is reflective of the strong demand for gasoline, given these low prices relative to the last 10 years of historical prices. Compare gasoline demand with this time last year, and demand is only going to strengthen into the heart of the summer driving season.
We would continue to buy Sunoco ( SUN: $ 33.02 ) + $ 0.73 or 2.3% on dips and write calls against the long position on rallies as a bottom is forming for this stock. Consumer Discretionary stocks remain one of the hottest sectors estimated to have gained 10% in the first quarter. Full year 2016 growth is estimated to be at + 10.6%. Lower gasoline prices have been an impetus to consumer spending.
Energy remains by far the weakest S&P sector. However, even excluding energy profits are expected to fall 4.2%. Stock prices bounced back sharply from the sell -off that ravaged stock prices at the start of the year. Analysts have continued to lower earnings forecasts since the first of the year. Full 2016 earnings growth S& P forecasts have fallen to 2.1% from 6.7%. Yet all the indexes have had a decent run from their lows early in the year. For example since the low on February 11th the S&P 500 index has gained 270 points or 14.9%. The DJT made its low on Jan 20th at 6625.53, but since then has grown 1367 points or 20.6%. Stock prices anticipate the future. But to change the landscape to a bull market the S&P has to charge through the highs set May 2015 at 2134.71.
Market Strategies Economic Data
The Industrial Production and Capacity Utilization report for March was disappointing. Total production declined 0.6% (Briefing.com consensus 0.0%) and total industry capacity utilization was just 74.8% (Briefing.com consensus 75.5%). On a year-over-year basis, industrial production is down 2.0%.
March was the second straight month that industrial production declined 0.6% after February was revised down from an originally reported 0.5% decline.
A significant portion of the decrease in March can be traced to the indexes for mining and utilities, which fell 2.9% and 1.2%, respectively. The drop in mining output was the largest since September 2008. Manufacturing output was down 0.3% following a downwardly revised 0.1% decline (from +0.1%) in February. The production of durables was down 0.4% in March while the output of nondurable manufacturing edged lower following a 0.5% decrease in February.
The Federal Reserve released its annual revision to the index of industrial production and capacity utilization on April 1. With the revision, the February reading for capacity utilization, which was previously reported to be 76.7%, was revised to 75.4%. It was marked down again to 75.3% with the March report.
Category | MAR | FEB | JAN | DEC | NOV |
Industrial Production | |||||
Total Index | -0.6% | -0.6% | 0.5% | -0.4% | -0.6% |
Manufacturing | -0.3% | -0.1% | 0.4% | 0.0% | -0.2% |
Utilities | -1.2% | -3.6% | 3.3% | -1.7% | -2.6% |
Mining | -2.9% | -1.0% | -1.6% | -2.4% | -1.4% |
Capacity Utilization | |||||
Total Industry | 74.8% | 75.3% | 75.8% | 75.4% | 75.7% |
Manufacturing | 75.1% | 75.4% | 75.5% | 75.3% | 75.3% |
|
One can glean from this report that first quarter GDP is going to be a disappointment going into May.
The manufacturing capacity utilization rate of 75.1% is 3.4 percentage points below its long-run average; meanwhile, the utilization rate of 73.7% for both mining and utilities is the lowest over the histories for each of those series.
Market Strategies Cycles
Seasonally, April is the best month for DJIA with an average gain of 1.9% since 1950. April has been up in 44 of the last 66 years. However, average election-year performance over the same period has been weaker, 0.9% gain with 9 advances and 7 declines in election-year Aprils. April’s week after options expiration also has a solid track record, up 10 of the last 12 years with and average gain of 0.7%. This strength is echoed by S&P 500 with five straight bullish days beginning April 15 and running until April 21. April’s seasonal strengths do support some further market gains.
Economic data remains negative though and could halt the rally in its tracks. Just this week, U.S. retails sales fell 0.3% in March versus an expected rise of 0.1%. Industrial Production fell 0.6 in March after falling the same 0.6% in February. Capacity Utilization is down sharply to 75.3%.
Consumer spending accounts for more than two-thirds of U.S. economic activity. This tepid result helps explain the Atlanta Fed’s GDP-Now model forecast of just 0.3% real GDP growth in the first quarter. Considering lower energy costs and the apparently strong labor market something would seem amiss.
Today’s initial weekly jobless claims were just 253,000, the lowest since 1973. This appears to be an outstandingly firm data point or is it? Digging deeper reveals the labor force participation rate, at 63% is also the lowest it has been since the late 1970s. It would seem, and the lack of meaningful wage growth also tends to support, that there is more slack in the labor market than the headline numbers indicate. The employed are also confronting higher healthcare and higher education costs. In many areas substantially higher state and local taxes are absorbing the savings from lower energy and any wage gains.
Then there is the Fed that seems very much focused on concerns outside of the U.S. and rightfully so as expressed by IMF Chair Christine LaGarde. They hiked the benchmark rate in December and have taken no action since citing recent global weakness and a dependence on incoming data and forecasts. Most recent PPI and CPI data suggest inflation is cooling again. There was not much inflation or growth before they moved to raise rates in December and there is even less today. As a result, CME Group’s Fed-Watch tool has the highest probability of the next hike being in December. This creates further uncertainty which disrupts markets.
Positive seasonal factors are winding down and the Presidential Election is heating up. Earnings, economic data and the Fed are mixed and unclear. The market gave us all a brief glimpse of how fast it can unravel earlier this year and the rally off the February lows has been brisk. Taking some risk out of portfolios seems to be the prudent course of action at this junction. This can be done through outright sells, tighter stop losses and the rotation into other typically defensive positions. It has been nearly a year since DJIA or S&P 500 traded at their highs and current strength is likely to fade before it happens again.
Stochastic, MACD and relative strength indicators applied to TLT had improved substantially since mid-March, but have begun to turn less positive. TLT’s current pullback appears to be setting up a much better entry point for new long positions. Economic growth is tepid, wage growth is sluggish and inflation remains subdued which is likely (and highly expected) to slow or perhaps even delay future rate hikes by the Fed. This trade overlaps nicely with last week’s trade idea of adding a half position in TLT to the Almanac Investor ETF Portfolio on dips below $129.75. This trade is tracked in the ETF Portfolio.
Stock traders may consider the exchange-traded fund, iShares 20+ Year Bond (TLT), as a replacement for the futures contract. TLT has nearly $10 billion in assets, typically trades more than 9 million shares per day and has a reasonably deep and liquid options chain available. TLT’s expense ratio of just 0.15% is very reasonable and its yield of around 2.4% is also attractive.
The conclusion is that no-one knows what the markets are going to do. Will the Central Banks be successful in creating demand and at least a “ whiff of inflation?” Economic fundamentals have been deteriorating, but it is too early to know the outcome of all the uncertainty about the future of the world’s economy. Central banks might be successful and if so the markets will anticipate by making new highs. It is realistic to utilize options taking measured risk until we know more about what to expect to see in equities. If the Central Banks are successful, both equities and precious metals can advance. The best way to play this market is to be disciplined to take measured risks utilizing stops. The stop-loss is your best friend.
The Central Banks are serious and no-one should buck their trend. Some safe-haven markets, such as the Japanese yen and gold, did not give up their beginning-of-year gains when risk markets rebounded, suggesting that investors are caught between their earlier concerns and the signs of a somewhat better economic outlook. I believe we have to acknowledge the improvement in fundamentals.
Watch volatility for a clue to direction. The UVXY is best. It is better to utilize this ETF as an indicator rather than for trading.
Undervalued Small Cap Stocks
Lower Priced stocks that look to be a buy:
Repro-Med Systems, Inc ( OTCQX: REPR 0.31 )*
Fourth quarter preliminary net revenues will exceed $3.2 million, representing a slight increase over the $3.1 million of the previous quarter. Sales are led by the Company’s proprietary infusion products. The Company’s fiscal year ended February 29, 2016.
This month the Company participated in the 25th Annual National Home Infusion Association (NHIA) Conference and Expo in New Orleans, LA and used the occasion to introduce its new “On-Line Calculator”, a tool to help determine which of the Company’s Precision Flow Rate Tubing™ and RMS HIgH-Flo Subcutaneous Needle Sets™ to use based on the medication being administered and desired time of infusion.
RMS Medical Products was one of 110 exhibitors in attendance at NHIA. Customers responded well to the new calculator and expressed that the new format of the “On-Line Calculator”, which can be used on any computer, tablet, or mobile device, was easy to use and very helpful. The marketing and sales teams continue to build new relationships and expand the Company’s customer base as evidenced by continued strong sales.
Andy Sealfon, Company President and CEO commented, “The military has expressed interest in our products for utilization in emergency applications as well as use in VA hospitals. We believe that because of our performance standards and the reliability of our products, we will provide them with great value and benefits.”
The Company manufactures medical products used for infusions and suctioning. The Infusion product portfolio currently includes the FREEDOM60(R) and the newer FreedomEdge™ Syringe Infusion Pumps, RMS Precision Flow Rate Tubing(TM) and RMS HIgH-Flo(TM) Subcutaneous Safety Needle Sets. These devices are used for infusions administered in professional healthcare settings as well as at home. The Company’s RES-Q-VAC line of medical suctioning products is used by emergency medical service providers in addition to a variety of other healthcare providers.
NHIA is a trade association representing the interests of entities providing infusion and specialty pharmacy products and services to home-based infusion patients.
The Company’s website is www.rmsmedicalproducts.com.
Repro-Med Systems, Inc has had an increase in sales each of the last four years. They finished the year of 2014 with $ 11.2 million in sales reflecting top line growth of 29% from 2013.In each of the previous two years they had a 12% increase in sales. The company has had at least $ 700 thousand of net income in each of the past four years and has no debt. The patented needle sets alone can give the company a huge growth potential. In my opinion, with new products coming on stream, the stock should trade between $ 3 and $ 8 in the next two years.
Oakridge Global Energy Solutions, Inc. (OTCQB: OGES 0.82) *
Oakridge global energy is a developer, designer and manufacturer of proprietary energy storage solutions. The Company is based out of Florida’s “space coast” near Kennedy Space Center. They make premium quality, proprietary batteries, battery systems and lithium ion cells that are built for maximum performance over the traditional lead/acid batteries. OGES, proudly manufacturing in America since 1986, produces batteries for military, consumer, government, and industrial applications. Target market priorities include golf cars and other recreational vehicles, electronics, and devices requiring rechargeable batteries.
Oakridge Energy produces highly reliable, sustainable and dependable batteries for mobile power sources. Based on size and weight, OGES products deliver a higher capacity than comparable competitor batteries. OGES batteries are higher in quality, longer lasting and safer to use. These batteries have undergone and passed rigorous military testing in underwater and aerial vehicles proving to be high/low pressure tolerant. Most significant, OGES batteries are superior performing yet competitive in the market.
Martac Maritime Tactical Systems, Inc., MARTAC recently conducted very successful field trials on the Inter-coastal waterway in Palm Bay, Florida. MARTAC is a Melbourne, Florida based company that designs and produces the Man-Portable Tactical Autonomous Systems (MANTAS) that can reach extreme high speeds and operate anywhere in the world. These vehicles are designed to be used in numerous applications including naval fleet protection, mine warfare, port and harbor security patrol, antipiracy, search and rescue, and many others. shows our high quality and high performance gets us into the military space at a time when made in USA is of critical strategic importance.
Freedom Trucks shows that Oakridge can outperform Tesla and the “Tesla of trucks” – trucks are much more difficult and laborious to power than cars – because of the Oakridge high power high energy dense batteries, we need only 180 OGES batteries to power the interstate truck that pulls an
80,000 lb trailer, whereas it would take 208,000 Tesla/Panasonic batteries, which is simply not feasible.
Lithium ion batteries, deliver twice the energy of nickel cadmium batteries and are the fastest growing battery segment. Their growth and demand dynamically forward trending. They are lightweight and easy to maintain. They deliver superior electro-chemical output and provide highest energy density for weight, non-metallic and are rechargeable. In 2015, the OGES ProSeries golf car was launched at the annual PGA show, the largest golf show in the world. OGES plans to have a new factory producing its patented thin film solid state lithium ion batteries by 2017. OGES is commencing delivery of small format prismatics to help several smart card customers reach the next generation. Their growth will be serviced by the new factory. These batteries are also in a rapidly growing demand for a variety of applications.
Oakridge has recently continued expansion of its ISO certified manufacturing facility and warehouse in Palm Bay, with the support of Florida Governor Rick Scott. The new facility represents a $270 million investment, increasing the size of the manufacturing plant to 70,000 sq-ft to accommodate the growing demand for OGES batteries. Production is expected to increase from 250,000 to 25 million cells per year by 2018. The company’s growth will provide 1000 Americans with new jobs; this is part of the company’s commitment to support domestic employment. Overseas, Oakridge Global Energy Solutions Limited (Hong Kong) is a subsidiary company that operates for sales and service in Asia.
Pluristem Therapeutics ( Nasdaq : PSTI: $ 1.76 )
is a leading developer of patented placenta-based cell therapy products through its ( Placental expanded ) platform. In 2016 PLX cells will enter pivotal trials aimed at marketing approval in two indications serving multi-billion dollar markets. Positive clinical trial data for the cells have been reported in multiple indications. PLC cells release a cocktail of therapeutic proteins in response to inflammation, ischemia, hematological disorders and radiation damage. The Company’s proprietary, three – dimensional expansion technology is used to grow the cells in mass quantities with batch-to-batch consistency at Pluristem’s FDA and EMA approved state-of-the-art manufacturing facility. The cells do not require tissue matching prior to administration, making the treatment cost effective and readily available in virtually any medical setting. Pluristem has a strong intellectual property position, GMP-certified manufacturing facilities, strong balance sheet and strategic relationships with major research institutions.
Japan’s Patent Office just granted Pluristem two key patents, which cover: 1) Pluristem’s core technology of three-dimensional expansion methods for producing therapeutic cell products derived from placental or fat cells; 2) the use of placenta-derived cell products grown with this 3D technology to treat disorders of the hematopoietic system* (see below for a bit of detail), such as disorders caused by exposure to radiation or chemotherapy, and failed engraftment of hematopoietic stem cell transplants. Pluristem continues to strengthen its IP position in order to support the current negotiations with pharmaceutical companies in Japan regarding potential partnerships for the development and commercialization of its Placental exanded (PLX) cells.
Key to their activities in Japan, and as is descried on the fact sheet, is that Pluristem received clearance for the protocol for a Phase 2 trial in critical limb ischemia targeting marketing approval in Japan, via Japan’s accelerated regulatory pathway for regenerative medicines. Having been accepted into that pathway, Pluristem is able to apply for conditional marketing approval after a single successful phase 2 study. If the Phase 2 results are positive and PLX-R18 gets approved on the basis of those data, they will not need to spend the years and millions of dollars on Phase 3 trials, but will have to collect “real world” data on patients who have been prescribed the drug to treat critical limb ischemia, once it hits the market. In any case, acquiring IP for all placenta-derived cell therapies is crucial to activities there, as is protection of Pluristem’s 3D manufacturing methods.
Gold Mining USA OTC: GMUI ( 0.05 )
Has both mining activities in Australia and the U.S. as well as the Savannah Resort, a senior living facility in Queensland, Australia. For more information please go to their website www.gmuiinc.com
.
Gold Mining USA Inc is an emerging natural resources company focused on developing metallurgical and mining projects. The Company’s business model is to acquire projects with the potential to provide significant resources through exploratory drilling and generate value through their development, joint venture or divestment. GMUI has a team of experts who will manage all mining operations available on their website. In addition GMUI has an Offtake Agreement with a prestigious Swiss-based Gold buyer and Refiner to purchase its gold production at the spot price at the London Bullion Market ( LBMA ) on the day gold is collected.
GMUI Strategy: The company uses strict investment criteria for project acquisitions and focuses on available tenements in proximity to operating mines, or in areas with proven or potential in-ground resources in regions suitable for short-term development. Projects are selected based upon historical drilling or sampling results combined with robust geological mining concepts and financial models. The projects are explored, analyzed and where required, brought into compliance to JORC/NI 43-101.
Australia and Nevada provide the opportunities to exploit smaller, undeveloped or previously mined gold resources that are of no interest to the large mining companies. In addition, there are numerous small hard rock and alluvial gold mines which have viable gold resources but are unable to raise the funds to start up or continue operations.
An initial target acquisition, Mt Tymn, provides an opportunity to enter the gold mining arena in Australia on a small scale with the confidence of total outlay recovery and good profits, sufficient to expand operations by acquisition of similar nearby deposits to continue positive cash flow mining and commence an exploration program capable of even greater rewards.
Mt Tymn is located approximately 125kms southwest of Darwin, 1km east of the Stuart Highway and 18kms south of the Adelaide River. As part of this acquisition, GMUI will also own the MLs relating to Ringwood which is situated approximately 120 kms southeast of Darwin, in the Pine Creek area.
The minimum gold resource at Mt Tymn is conservatively estimated at 227,000 ounces with large potential for further drilling and assessment. Gross revenue is estimated to be in excess of $ 300 million with a gross profit expected to exceed 45%.
Fundamental Analysis Stocks To Buy with Stops
Fundamental Analysis Stocks To Buy with Stops: Using fundamentals the following are stocks to buy and they have done well. Now it is your decision whether to take profits in these uncertain times.
Value oriented stocks were mixed last week. The Alcoa earnings were nothing great but the shares were oversold going into earnings. Sunoco, Church and Dwight, Harley Davidson and Sally Beauty , AT^T and Microsoft were all in good shape and should be bought on weakness. Church and Dwight is looking solid and should be bought any two days down. Meanwhile we would not argue with taking profits.
The HDGE goes up when the market goes down. The HDGE was theoretically bought and then stopped out with a small loss at 10.68.. It has been a major success for those who believe in hedging. The losses are very small on the HDGE considering huge gains on the longs.
Enzo Biochem has come to life and appears ready to take on the $ 5 level.
Symbol | Name | Business Description | PE | P/S | MV mln | Price | Buy Limit | Stop Loss
Or sold |
FFIC | Flushing Financial | Bank Holding company Savings and loans | 13 | 3,5 | 592Mln | 20.96 | 19.50 | Sell |
SUN | Sunoco | Oil and Gas Refining and marketing | 10 | 0.2 | 2.1B | 33.02 | 29 | Unable |
AA | Alcoa | Aluminum Processing and Technology | N/A | 0.4 | 9.5B | 10.01 | 7.05 | 7.97X
Earnings season begins |
SBH | Sally Beauty Holdings | Specialty Retailer and distributor beauty supplies | 16 | 1 | 4B | 30.49 | 27.30 | 30x |
HOG | Harley Davidson | Motorcycles and related products | 11 | 1.32 | 8B | 46.43 | 39.84 | Sold at 51.66 on 4/4 |
CHD | Church & Dwight | Consumer Products Sodium bicarbonate Arm and Hammer | 25 | 3 | 10.6B | 93.91 | 79.80
01/26/16 |
Take Profits sold 94.20 |
T | AT&T | Communications | 36 | 1.54 | 211.7B | 38.48 | 34.10 | 37x |
MSFT | Microsoft | Technology Software, Services, Devices | 17 | 4.7 | 431B | 55.65 | 50.90
|
53.50x |
VA | Virgin Air | Regional Airlines | 7.2 | 0.9 | 1.5B | 55.50 | 30.30
Suggested buy |
28.50x
Hold for merger |
ENZ | Enzo Biochem | Life Sciences | NA | 1.35 | 134M | 4.99 | 4.15
Suggested buy |
4.48x |
BAC | Bank of America | Commercial Bank | 10 | 2.02 | 165.3B | 14.00 | 11.86 | 10.90x |
HDGE | Advisor Shares | Ranger Bear ETF | 10.56 | Bought 10.86 | 10.68x
Stopped out |
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Rule 17B Attestations and Disclaimers
Princeton Research, Inc. has approximately 2,581,578 shares of AIVN both free and restricted and represents them for Investor relations. Princeton also has about 40,000 shares of TXGE. Princeton is paid $ 1,500 per month from RMS Medical Products. Princeton has bought 81,100 shares of RMS Medical Products. Princeton was paid $ 2,500 to write a report on Xinergy. Princeton has signed a contract with CBLI to be paid $ 2500 for July and August for investor relations. Princeton has been engaged by Target Energy. No contract is currently in place. Princeton was paid about 500,000 restricted shares of Leo Motors.
When there is no movement in penny stocks, even though there is none or very small losses, we will liquidate ( sold AIVN on stop ) even though we like the company, if money is needed for better opportunities.
We now believe REPR represents upside opportunity. The Target ADR trades at about $ 4.50 in U.S. vs 0.05 in Australia. Princeton owns 400,000 Australia shares and about 900 U.S. ADR’s.
Pursuant to the provisions of Rule 206 (4) of the Investment Advisers Act of 1940, readers should recognize that not all recommendations made in the future will be profitable or will equal the performance of any recommendations referred to in this e-mail issue. Princeton may buy or sell its free-trading shares in companies it represents at any time.
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