
October 17, 2016
Market Investing Strategies Newsletter
Sample Issue
Where To Invest October 2016
Where To Invest 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 October 2016
Investing Trade Alerts
Text Message Investing Alerts
Options Trading Alerts Service
Undervalued Small Cap Stocks
Stocks To Buy With Stops October 2016
Read the October 17, 2016
Where To Invest in October 2016
Market Investing Strategies Newsletter
Proven Profits Trading Success
Results From Our Recent
Text Message Investing Trade Alerts:
123% Profits on SPY Oct 19 Puts in 2 Days
300% Profits on SPY Oct 12 Puts in 2 Days
15% Profits on SPY Oct 19 Puts in 2 Days
50% Loss on LMT Calls in 1 Day
45% Profits on SFM Calls in 6 Days
50% Profits on TBT Calls in 8 Days
86% Profits on AA Calls in 6 Days
66% Profits on SPY Puts in 2 Days
47% Profits on SLV Calls in 3 Days
58% Profits on SUN Calls in 3 Days
85% Profits on SPY Puts in 3 Days
82% Profits on SLV Calls in 2 Days
51% Profits on AA Calls in 7 Days
157% Profits on NEM Calls in 4 Days
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Where To Invest October 2016
Options Investing Trade Alerts
Charles Moskowitz Discussion
There are 2 Open Positions:
AMBA Oct 65 Calls and
SPY Oct 212 Puts
Week 41 was nothing less than spectacular performance-wise. We had the biggest gain of the year and added $1,641 in profits bringing YTD to a new high mark of $7,835. We have 2 open positions, SPY 10/212 puts @ $ .93 and AMBA 10/65 calls @ $1.10 (discussed in Friday night’s Note.) Funds in use are $812.
Well, I’ve been talking about the “bear flag” for so long I guess it had to work out at some point. All kidding aside, if it does hold here and doesn’t violate to the upside, we could be headed lower, and quickly. While I am somewhat of an old timer, there are still some clichés that hold true. Large multinationals suffer when the UD$ is strong and rising interest rates strengthen. The US dollar, commodities and materials also tend to suffer if they are quoted in US dollars. This would include oil, gold and really anything we export. And last, but certainly not least, if there is no topline growth, layoffs and cutting costs do not bring prosperity. While some may say “It’s different this time,” IT’S NEVER DIFFERENT.
October and November, are the months many relate to as the “crash” months, are really the volatility months. Yes, the most famous crashes did occur in October, but the late October / early to mid-November have also been the setup for the year end rallies. I don’t want to condemn this bull market to being over, the world is still awash in money and we are still the best house on a bad block (although Europe and China may be getting better) and so it has to go somewhere. Strong US$ and equity prices is not a terrible combination. Another sign of strength is the A.A.I.I. survey with Bull now 30% below avg, Bears 10% above and Neutral still the highest reading @ 40.8% still over 33% above average. So while I’m trading from the short side primarily, I still feel we are not nearly done with the long term upside. However, after looking a lot of charts this weekend the group that looks the most ready to rally is the VIX, VXX and the leveraged reverse indexes…not a great way to start the week.
New trades will be texted..CAM
Options Investing Trade Alerts Summary
DATE | TRADE | PRICE | COST | PROCEEDS | RESULTS |
10/14 | Bought 4 SPY October 212 Puts | 0.93 | 372 | ||
10/13 | Bought 4 AMBA October 65 Calls | 1.10 | 440 | ||
10/13 | Sold 2 SPY ( 100% Profit Rule ) Balance | 2.00 | 400 | 238 Gain | |
10/13 | Sold 2 SPY ( 100% profit Rule ) | 1.62 | 324 | 162 Gain | |
10/12 | Bought 4 SPY October 19th 212 Puts | 0.81 | 324 | ||
10/11 | Sold 5 SPY October 12th 216 Puts | 0.90 | 450 | 225 Gain | |
10/11 | Sold 3 SPY October 12th 216 Puts
Sold 2 SPY October 12th 216 Puts |
2.25
3.37 |
675
674 |
540 Gain
584 Gain |
|
10/11 | Sold 6 LMT October 240 Calls
( 50% Loss Rule ) |
0.34 | 204 | 204 Loss | |
10/11 | Sold 6 SPY October 19th 212 Puts | 1.18 | 708 | 96 Gain | |
10/10 | Bought 10 SPY October 12th 216 Puts | 0.45 | 450 | ||
10/10 | Bought 6 SPY October 19th 212 Puts | 1.02 | 612 | ||
10/10 | Bought 6 LMT October 240 Calls | 0.68 | 408 |
3rd Week expiration when the month is listed without a date
Previous closed out trades not listed here may be seen in previous market letters in the
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Where To Invest October 2016
Undervalued Small Cap Stocks
Lower Priced stocks that look to be a buy:
Repro-Med Systems,Inc ( OTCQX: REPR 0.43 )*
For the quarter ended August 31st, net revenues were $3,147,930 compared with $3,166,177 in the comparable quarter last year. REPR had strong organic growth both domestically and internationally in the quarter as well as new customer wins, which are expected to continue going forward. Results were masked by the non-recurring contribution from a large clinical trial last year. Net revenues increased in Q2 compared with Q1 of the current fiscal year by 5%.
For the six months ended August 31st, net revenues were $6,138,096, an increase of 5.9% compared with $5,796,722 for the same period last year, driven by increased sales of infusion products to existing customers as well as the addition of new customers.
For the three months ended August 31st, gross profit was $1,954,592 compared with $2,006,729 for the same period last year. RMS continues benefiting from lean manufacturing initiatives to streamline operations, which have resulted in increased capacity and decreased direct assembly labor costs, as well as the moratorium on the medical device tax. For the six months ended August 31st, the gross profit margin increased 2.6% to 63.4%, up from 60.8% for the same period last year. Gross profit for the six months ended August 31st was $3,891,404 compared with $3,524,589 for the comparable period.
RMS continues to incur professional fees related to regulatory and litigation and has made significant investment over the last twelve months in its sales, regulatory and operations management to help launch RMS to the next level of growth. As a result, the Company reported for the quarter ended August 31st, a net loss of $82,612, compared to net income of $335,214 in the same period last year. For the six months ended August 31st, net loss was $315,928 compared with net income of $270,574.
Enzo Biochem ( ENZ: $ 5.63 )*
The stock moved from approximately $5 a share to approximately $7.00 from May 1 to July. In the last few days Enzo stock has been under heavy pressure. There is nothing fundamental to cause the slide in price. So the business model remains in place and hopefully will add new products over the remainder of the year. They completed the 2016 fiscal year at the end of July and probably had a cash position of some $65 million and no debt to speak of. When the stock cleared the $7 level, the Relative Strength Index was over 70, which is overbought. That $7 number was a 4 year high The last two days has brought the Index close to 30 which is oversold and we should see a bounce in the stock price this week.(just a guess) We have to remember the Russell Indexes that bought close to 3 million shares in late June also shorted close to a million shares as a hedge. That short position declined by some 300,000 shares from July 1 to July 15.
Over the rest of the year we could see more AmpiProbe panels being approved; NIH comments on the Optiquel trial for Uveitis; positive outcomes in the litigations.
The stock is oversold and the upside opportunity becomes bigger. The fundamentals haven’t changed and in fact have become stronger with the latest AmpiProbe approval. Enzo has cash of $50 million and no debt. There are 7 more cases to get settled in Delaware which can provide significant additions to the cash position. AmpiProbe will have more submissions to the New York regulatory agency this year. AmpiProbe is cheaper, better and faster than existing technology and that is a $3 billion market.
This is an awesome potential for a 47 million share company and who knows what will happen if the NIH has positive statements on their Optiquel test for Uveitis. The stock is 50% owned by Institutions and funds, 15% by insiders and I guess 10% by hedge funds. That leaves some 11 million shares in the float. If the Russell causes 2-3 million shares to be bought the float then become 8-9 million shares. Good news can really move the price.
Oakridge Global Energy Solutions, Inc. (OTCQB:OGES 0.40 ) *
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.
Oakridge Global Energy Solutions is commencing production of state-of-the-art Lithium-Ion batteries. The company is currently in the process of soliciting bookings for presale orders with several key industries to include the federal government. Perhaps the most important takeaway regarding Oakridge Global Energy Solutions lies in its relationships that will make it one of the few world manufacturers who are able to produce first generation lithium-ion technology that will surpass what is effectively being currently produced.
Furthermore, the company has developed an industrial design team that has incorporated a 21st Century contemporary art style to its cell products. The company has numerous patents for its technology but perhaps the most interesting of those centers around the Nano-sized lithium thin film solid state batteries with a Nano encasement. This product in itself stands to propel the company into areas that currently only it has the rights to manufacture in the United States. The Nano lithium thin film solid state battery has a large upside market potential both domestically and abroad.
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 Pro Series 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 a small format prismatic 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.
Pressure BioSciences OTCQB: PBIO ( 0.36 )*
The company has identified significant “needs” and the means to fill them in the world of today and the foreseeable future:
NEEDS IN MEDICINE: In the world of medicine our dramatically improved ability for early detection or to confirm and refine diagnosis ranging from over a hundred types of cancer to tuberculosis and a hundred other maladies and conditions is “bottlenecked” by 30 year old methods of preparing test samples. Collectively such diagnostic samples exceed a hundred million annually.
NEEDS IN RESEARCH: Globally there are over a half a million medical and pharmaceutical research scientists working in over eighty thousand laboratories who are hampered by the time consuming and outdated methods of preparing test samples.
NEEDS IN FORENSICS: Globally, in millions of cases, swift and sure exoneration of the innocent and / or justice for the guilty is often delayed or even denied because of the ponderous means of preparing and conducting DNA and other forensic testing.
PBIO’s proprietary Pressure Cycling Technology (PCT) platform is a true paradigm shift in sample preparation. Current sample preparation methods are over 30 years old, mostly mechanical, inordinately time consuming, and highly inadequate. PBIO’s PCT platform dramatically reduces sample preparation time requirements while dynamically improving sample quality and functionality for the intended purposes.
The virtually unlimited potential and advantages of PBIO’s platform has been validated and recognized by top scientists in more than 100 publications and peer reviewed journals.
The technology has been secured through 24 issued patents and with additional patents pending.
Night Food, Inc. ( NGTF.0.12 )*
NGTF is a wholly-owned subsidiary of Night food Holdings incorporated in Nevada in 2013 to manufacture and distribute healthy-choice bedtime snacks. The Company has an exclusive agreement with RFI, natural ingredient manufacturer and proprietor of Chocamine, a patented chocolate ingredient.
Americans keep gaining more weight. People have the tendency to grab for goodies at the end of the evening as they relax to enjoy some T.V. Eating and snacking too late at night is a contributing factor to gaining weight. Seventy percent of adults, ages 18-54, eat right before bed. Chocamine delivers the health benefits of chocolate to the body (amino acids, minerals and polyphenols) without the added sugars, caffeine or fat.
People give in to the intense hunger cravings that leads to the consumption of sugary, salty or calorie dense foods to satisfy their appetite. Most of the snacks that people typically eat create a disturbance in sleep, causing a person to wake up feeling unrested. Night Food offers nutrient filled alternatives to high-calorie junk foods. There are flavor filled snack bars-either Cookies and Dreams or Midnight Chocolate Crunch that will help curb hunger, satisfy cravings, improve rest and give the body essential vitamins and minerals.
Consumers spend over $50 billion/ year on night-time snacks, nearly 1 billion a week. More people desire healthy alternatives to late night consumption of the traditional fattening ice cream, chips and cookies.
Sugar and caffeine in most snacks causes disruptive sleep. Each bar has only 142 calories and 5 grams of fiber for slow absorption of energy and gives a feeling of fullness and satisfaction. There is also 132 mg of calcium and zinc for replenishing the body and feeling well rested in the morning.
iSIGN Media Solutions ( ISDSF: $ 0.085 )
Announces Signed Contract Between We Build Apps and a Major Shopping Complex Located in Ohio. The contract covers installation of 500 Smart Antennas into a first Shopping Complex; Minimum Revenue to iSIGN is $2.7 million Canadian.
Recent news has pushed it above its 30 day moving average and it had exceeded $0.15 Canadian on a high volume breakout. The stock has been disappointing failing to move above its next resistance at $0.20 and move towards its 2 yr high of $0.28.
The Crocker people and their 22 developments could bring iSign significant revenues. Homeland Security and a major insurance company deemed the smart antenna as a safety device as well as a security device making the potential for new markets is limitless. One deal brings in 3 million times that by 20 deals because the insurance company theoretically gives a 20-25% premium discount to companies that use the smart antenna.
According to the iSign Media reseller, JEA Technologies, eHealth Consortium Group’s intention is to start installations in hospitals located in the State of Victoria.
Leo Motors ( LEOM: $ 0.19 )*
has patents for the electric battery industry which we will be writing about in upcoming weekly reports. They have developed a lithium battery that can operate vehicles in sub-zero climates. Their subsidiary LGM has developed battery technology supported by the Korean government to make it possible to use electric battery technology for fishing boats. They have a cartridge system which is a light-weight replacement method of swapping electric batteries.
Fishing has been harmed by the noise and oil leaks from internal combustion engines. LGM has solved that problem and besides eliminating the toxic problem, operating costs are reduced by 25%.
In addition they have a special patent for averting electric hazards and shocks. Leo developed the Internet of Things for e-boats which is networked and connected with an Android Operating System. Leo’s power supply system is CAN ( Controller Area Network ) based, which enables mobile diagnosing between mobile devices and boats using the Leo technology.
Leo is developing a battery swap system for Kalmado in Puerto Princesa, Philippines which is a world famous tourist attraction. They will be converting 100 boats as the environment is expected to become 100% free of the toxicity from internal combustion engines. Also, Leo has developed a battery swap system for Go-Karts to be used in malls in China, Korea and Myanmar.
Leo Motors has a new carbon nanotube battery power pack that functions and supplies full power in extreme low temperatures such as below 49 degrees without the need for grid electricity.
Where To Invest October 2016
Fundamental Analysis
Stocks To Buy with Stops
Using fundamentals the following are stocks to buy and they have done well. The table is hypothetical. We have taken numerous profits as indicated on the table below. Balance is critical.
The Boeing closed over the 50-day M.A. at $ 132 in early October thus suggesting a long position.
We would buy Bristol Myers at $49.20 with a stop loss at 47.42.
We are long FFIC at $ 19.10 and very much interested in the Flushing Financial.
You should have bought the HDGE on a close above 9.65. We paid $ 9.76 on a theoretical buy on the opening Sept 12th. Stop –loss at $ 9.47.
Symbol | Name | Business Description | PE | P/S | MV mln | Price | Buy or Sell Limit | Stop Loss
Or offset |
BMY | Bristol Myers | Manufacturer
Biopharmaceutical |
28 | 4.8 | 83B | 49.72 | 49.20 | 47.42x |
DY | Dycom | Materials. Construction Cell Towers internet Infrastructure | 25 | 1.1 | 2.7B | 83.16 | Buy 83 | 81.80xco |
BA | Boeing | Aerospace, commercial jetliners, military systems | 14 | 0.85 | 81B | 133.50 | Long at
132 |
Stop at 129.70 |
HL | Hecla Mining | Basic Materials | 44 | 3.61 | 1.7B | 5.24 | 3.95 | Try to get Long |
FFIC | Flushing Financial | Bank Holding company Savings and loans | 13 | 3,5 | 592Mln | 22.87 | 19.10
06/27 |
19.90x |
AA | Alcoa | Aluminum Processing and Technology | N/A | 0.4 | 9.5B | 26.44 | 21.15 originally bought 2/8/16 | Must hold 30
No new position |
T | AT&T | Communications | 36 | 1.54 | 211.7B | 39.22 | 34.10 | No Current position |
VA | Virgin Air | Regional Airlines | 7.2 | 0.9 | 1.5B | 52.08 | 30.30
Bought |
Sell to take profits |
ENZ | Enzo Biochem | Life Sciences | NA | 1.35 | 134M | 5.63 | Bought
at 5.13 10/7/16 |
Must hold 50 day m.a. |
BAC | Bank of America | Commercial Bank | 10 | 2.02 | 165.3B | 16.13
|
Buy at 15.42 | 14.60x |
HDGE | Advisor Shares | Ranger Bear ETF | 9.81
|
Bought at 9.76 | 9.47sco |
Where To Invest October 2016
$100,000 Trading Account
There were several closed out options positions: the only losing trade was the LMT Calls bought at 0.68 and sold on the 50% loss rule at 0.34. There were three series of SPY Puts bought on the 10th,11th and 12th each day making huge gains of $ 3,802.
The net for the week after subtracting the LMT loss of $ 408 came to $ 3,394.
For the entire year on closed out trades, our hypothetical profits increased by $ 3,394 to $21,656.
The options expire on the third Friday of each Month unless otherwise posted.
The Stock table has the following positions:
AA ( 2 ) ,AMBA, EYES ( 2 ), FAST, HL, MOS( 2 ), NBGGY, REPR, SAM ( 2 ),
SAN, SCO( 2 ), SPXU ( 2 ), SPY, EXQY, TWTR
The options call for a $ 2,500 investment unless otherwise stated; each stock position requires $5,000 unless otherwise mentioned specifically.
The money management is based on a hypothetical $ 100,000.
We are using a total of $81,099 for the 20 open long stock positions.
There are 2 open option positions requiring $ 1,624 which totals $ 82,723, leaving $ 17,277 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, Mosaic, 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.
Where To Invest October 2016
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) |
SPY Oct 212
8 lots |
Puts
0.93 |
10/14/16 | |||
AMBA Oct 65
8 lots |
Calls
1.10 |
10/13/16 | |||
SPY Oct 19th 212
8 lots |
Puts
0.81
|
10/12/16 | 1.62
Sold 100% Profit Rule
2.00 Sold Balance later same day |
10/13/2016
10/13/2016 |
$ 324
$ 476 |
SPY Oct 19th 212
12 lots |
Puts
1.02 |
10/11/16 | 1.18 | 10/11/2016 | $ 192 |
LMT Oct 240
12 lots |
Calls
0.68 |
10/10 16 | 0.34 | 10/11/2016 | ( $ 408 ) |
SPY Oct 10th 216
20 lots |
Puts
0.45 |
10/10/16 | 0.90
Sold Half 100% Profit Rule 2.25 Sold 5 a few minutes later
3.37 Sold Balance |
10/11/2016
10/11/2016
10/11/2016 |
$ 450
$ 900
$ 1460 |
Recommendations will be both listed in this letter and texted to members.
Previous closed out stock and option positions can be found in past Market Strategies Newsletter issues available in the VIP Subscribers Members Area.
Join Today to Start Getting Profits Like These.
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Where To Invest October 2016
$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) |
||
AMBA 100 | 63.75 | 10/13 | |||||
LMT 20 | 233.20 | 10/10 | |||||
SAM 20 | 156.69 | 10/07 | |||||
SCO 20 | 83.31 | 09/28 | |||||
SAM 20 | 151.30 | 09/23 | |||||
SPXU 150 | 24.70 | 09/13 | |||||
HDGE 300 | 9.76 | 09/12 | |||||
SCO 20 | 87.22 | 08/16 | |||||
AA 500 | 10.43 | 07/25 | |||||
SPXU 200 | 23.86 | 07/14 | |||||
HL 1000 | 3.95 | 05/03 | |||||
MOS 200 | 27.53 | 05/02 | |||||
EYES 500 | 5.04 | 04/04 | |||||
EYES 1000 | 6.49 | 12/28 | |||||
TWTR 200 | 28.51 | 10/28 | |||||
MOS 100 | 43.55 | 08/14 | |||||
NBGGY 600 | 1.40 | 02/17 | |||||
SAN 600 | 8.40 | 12/16 | |||||
AA 500 | 14.21 | 10/16 | |||||
TEXQY* 200 | 6.56 | 7/11 | |||||
REPR* 5000 | 0.22 | 10/22/12 |
Recommendations will be both listed in this letter and texted to members.
Previous closed out stock and option positions can be found in past Market Strategies Newsletter issues available in the VIP Subscribers Members Area.
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.
Where To Invest October 2016
MARKET Laboratory – Weekly Changes
Prices are copied from Barron’s Weekly and Yahoo Finance and may be incorrect.
Dow
18,138.38 -102.11 -0.56% |
Nasdaq
5214.16 -78.24 |
S&P 500
2132.98 -20.76 -0.96% |
Transportation
8039.29 -17.57 -0.22% |
Russell 2000
1212.41 -24.15 -1.95% |
Nasdaq100
4808.49 -56.04 -1.15% |
Gold (spot)
1253.10 +4.20 +0.3% |
Silver
1744.10 +6.1 +0.4% |
Crude
50.35 +0.54 +1.1% |
Heating Oil
156.73 -1.20 -0.8% |
Unleaded Gas
1.4936 +0.0118 +0.8% |
Natural Gas
3.285 +0.092 +2.9% |
VIX
16.12 +2.64 +19.6% |
Put/Call Ratios
S&P 100 162/100’s +21/100’s |
Put/Call Ratios
CBOE Equity 68/100’s +6/100’s
|
Bonds
163-07 -1-22 2.55%+0.12% |
10 Yr. Note
129-274-066 1.79%+0.08%
|
Copper
211.05 -5.30 -2.5% |
CRB Inflation
Index 189.47. +1.15 +0.6% |
Barron’s* Confidence
70.9 -0.5 |
S&P100
946.89 -8.20 -0.86% |
5 Yr. Note
120-264 -207 1.27% +0.03%
|
Dollar
98.09 +1.46 +1.5% |
DJ Utilities
651.79 +8.33 +1.29% |
AAII
Confidence Index
Average |
Bullish
25.5% -3.3%
38.4% |
Bearish
33.7% +5.8%
30.30% |
Neutral
40.8% -2.5%
30.96% |
M1 Money
Supply +9.54% Oct 3rd
|
M2 Money
Supply +7.42% Oct 3rd
|
* 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.
Where To Invest October 2016
Technical Information
Support/Resistance Levels: SUPPORT RESISTANCE
S&P 500 2114 2170
Dow 18,045 18,386
QQQ 116.20 118.30
Transports 7900 8155
NASDAQ 5162 52.60
Where To Invest October 2016
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 | Bank of America BAC ( 0.34 vs 0.37 )Charles Schwab SCHW ( 0.33 vs 0.27 ) JB Hunt Trans JBHT ( 1.02 vs 0.99 ) Hasbro HAS ( 1.74 vs 1.58 ) Lennox Intl Lil ( 2.26 vs 1.82 )
08:30 hrs Empire Manufacturing Oct ( +2.0 vs -2.0 ) 09:15 hrs Industrial Production September ( 0.2% vs -0.4% ) Capacity Utilization September ( 75.6% vs 75.5% ) Celanese CE ( 1.61 vs 1.50 ) IBM IBM ( 3.23 vs 3.34 ) Netflix NFLX ( 0.05 vs 0.07 ) Del Taco TACO 0.12 United Continental UAL ( 3.05 vs 4.53 ) IDEX Corp IEX ( 0.92 vs 0.89 ) |
TUESDAY | Goldman Sachs GS ( 3.82 vs 2.90 ) Johnson & Johnson JNJ ( 1.65 vs 1.49 ) Philip Morris PM ( 1.23 vs 1.24 ) United Health UNH ( 2.08 vs 1.65 ) Valeant Pharma VRX 1.77 vs 2.74
08:30 hrs CPI September ( 0.3% vs 0.2% ) CORE CPI ( 0.2% vs 0.3% ) 10:00 hrs NAHB Housing Market Index October ( 59.0 vs 65 ) 16:00 hrs Net Long Term TIC Flows August ( NA vs $ 103.9B ) Intel INTC ( 0.72 vs 0.64 ) Intuitive Surgical ISRG ( 5.15 vs 5.24 )Navient NAVI 0.48 vs 0.47 |
WEDNESDAY | Abbott Labs ABT ( 0.58 vs 0.54 ) Morgan Stanley MS ( 0.63 vs 0.34 ) Halliburton HAL ( -0.07 vs 0.31 ) Northern Trust NTRS ( 1.09 vs 0.96 ) U.S. Bancorp USB ( 0.83 vs 0.81 ) Supervalu SVU ( 0.10 vs 0.13 )Reynolds American RAI ( 0.64 vs 0.55 ) Seagate Tech STX 0.90 v 054
07:00 hrs MBA Mortgage Index 10/15 ( NA vs -6.0% ) 08:30 hrs Housing Starts September ( 1168K vs 1142K ) Building Permits September ( 1164K vs 1139K ) 10:30 hrs Crude Inventories 10/15 ( NA vs +4.900 Mln Bbls ) 14:00 hrs Fed’s Beige Book October ( NA ) American Express AXP ( 0.95 vs 1.24 ) Crown CCK ( 1.30 vs 1.34 ) eBay EBAY 0.44 v 0.43 Kinder Morgan KMI ( 0.16 vs 0.08 ) Las Vegas Sands LVS 0.60 vs 0.66 Steel Dynamics STLD ( 0.65 vs 0.25 ) United Rentals URI ( 2.44 vs 2.57 ) Tractor Supply TSCO 0.66 vs 0.64 |
THURSDAY | Alaska Air ALK ( 2.04 vs 2.16 ) American Airlines AAL ( 1.69 vs 2.77 ) BNY Melon BK ( 0.81 vs 0.74 )Danaher DHR ( 0.83 vs 1.05 ) Lithia motors LAD 2.15 vs 2.03 Nucor NUE ( 0.90 vs 0.71 ) PPG Industries PPG 1.55 vs 1.61 Pulte PHM ( 0.44 vs 0.33 ) Quest DGX 1.35 v 1.28
Reliance Steel RS ( 1.31 vs 1.16 ) Rogers Comm RCI 0.88 vs 0.92 Travelers TRV 2.34 v 2.93 Union PacificUNP1.40 vs 1.50 Verizon VZ ( 0.99 vs 1.04 )Walgreens WBA 0.99 vs 0.88
08:30 hrs Initial Claims 10/15 ( 249K vs 246K ) Continuing Claims 10/08 ( NA vs 2046K ) 08:30 hrs Philadelphia Fed October ( 5.5 vs 12.8 ) 10:00 hrs Existing Home Sales September ( 5.30M vs 5.33M ) 10:00 hrs Leading Indicators September ( 0.2% vs -0.2% ) 10:30 hrs Natural Gas Inventories 10/15 ( NA vs 79bcf )
Advanced Micro AMD ( 0.01 vs -0.09 ) Boston Beer SAM 2.58 vs 2.85 Celestica CLS ( 0.30 vs 0.22 ) ETrade ETFC ( 0.39 vs 0.33 ) Forward Air FWRD ( 0.51 vs 0.58 ) Microsoft MSFT 0.68 vs 0.67 PayPal PYPL ( 0.35 vs 0.31 ) Robert Half RHI ( 0.71 vs 0.73 ) Schlumberger SLB ( 0.22 vs 0.78 ) Terex TEX ( 0.22 vs 0.58 ) Stetchers USA SKX ( 0.46 vs 0.43 )
|
FRIDAY | Ericsson ERIC 0.49 vs 1.34 General Electric GE ( 0.30 vs 0.32 ) Honeywell HON ( 1.63 vs 1.57 ) Parker Hannifin PH ( 1.56 vs 1.52 ) Synchrony Financial SYF 0.67 vs 0.69
Manpower MAN ( 1.71 vs 1.61 ) McDonald’s MCD ( 1.49 vs 1.40 ) Moody’s MCO 1.20 vs 1.11 ) Sun Trust Banks STI 0.89 vs 0.89 Interpublic IPG ( 0.29 vs 0.27 ) Fed Chair Yellen speaks at The Elusive Great Recovery U.S. Oil Rig Count rose by four Rigs to 432 The Nat Gas rig count rose by11 to 105, and there are two rigs listed as miscellaneous making a total US rig count of 539 . Crude closed higher at $ 50.35 up $ 0.54.The total rig count is lower by 326 from a year earlier. Natural Gas closed the week also higher for the week at $ 3.285 a gain of $ 0.092. |
Where To Invest October 2016
Fundamentals
The month of October has gotten off to a rough start for the stock market. This week produced another losing week for the major indices. The Russell 2000 fared the worst with a 2.0% decline while the Dow Jones Transportation average fared the best, relatively speaking, with a 0.22% decline. The Dow was off 0.56%, while the S&P 500 was down 1.0%. The Nasdaq failed to reclaim its 50 day moving average closing below it three days consecutively and a complete change of character after making a double top last Monday at the 5340 level. The Nasdaq ended the week losing 1.5%.
There was a familiar undercurrent driving things, too, as the losses flowed in the face of a strengthening dollar and rising long-term rates. The TLT, the iShares 20+ Year Treasury Bond ETF, fell to a new 4-month low Friday posting a weekly loss of 1.74%.
It’s going to be a busy week indeed. The earnings news, and particularly the guidance, will be watched closely along with the trading mannerisms of the U.S. dollar and long-term rates, which led to a somewhat ill-mannered stock market this past week.
Index | Started Week | Ended Week | Change | % Change | YTD % |
DJIA | 18240.49 | 18138.38 | -102.11 | -0.6 | 4.1 |
Nasdaq | 5292.40 | 5214.16 | -78.24 | -1.5 | 4.1 |
S&P 500 | 2153.74 | 2132.98 | -20.76 | -1.0 | 4.4 |
Russell 2000 | 1236.56 | 1212.41 | -24.15 | -2.0 | 6.7 |
The Dow Jones Industrial Average opened much higher last Friday and had gone 162 points higher in the first few minutes of trading before surrendering the majority of its gains and closing 102 points lower on the week. The biggest Dow losers last week were Cisco ( CSCO: $ 30.18 ) down $ 1.29 or – 4.1% on the week; Pfizer ( PFE: $ 32.66 ) fell $ 0.90 or – 2.7%; American Express ( AXP: $ 60.15 ) -$ 1.61 or down 2.6% and United Health Group ( UNH: $ 133.92 ) down $ 2.74 or – 2%. Apple ( AAPL: $ 117.63 ) gaining $ 3.57 or + 3.1% and DuPont ( DD: $ 69.03 ) + $ 0.68 or + 1% were the biggest winners.
The S&P 500 after a strong start also closed on its session low at 2,132.98. The worst performing stock was Ilumina Inc, a biotech stock, ( ILMN: $ 138.00 ) – $ 46.85 or down 25% in just a week. Alcoa was also a disaster ( AA: $ 26.44 ) – $ 5.07 or off 16.1%. Bristol-Myers Squibb ( BMY: $ 49.77 ) – $ 5.66 or off 10.2% for the week. Winners for the week included Tenet Healthcare ( THC: $ 22.78 ) + 10.1%; HCA Holdings ( HCA: $ 80.32 ) + 6.09 or + 8.2%; Kroger ( KR: $ 31.27 ) + $ 2.27 or + 8.1%; Southwest Airlines ( LUV: $ 41.32 ) + $ 2.27 or a gain of 7.8%; Alaska Air Group ( ALK: $ 72.31 ) + $ 4.20,+ 6.2%.
The US dollar ( DXYO: 98.09 ) +1.46 or plus 1.5% had another great week making a gain of 2.8% over the last two weeks. The strength in the dollar and the increase in long-term rates had the combined effect of raising both stock prices and earnings concerns for U.S. multinational companies. The US Dollar Index increased 1.5% this week to 98.09, benefiting mostly at the expense of a weaker euro, a weaker yen, and a weaker British pound. The greenback’s strength was partly a function of safe-haven flows and partly a function of interest-rate differentials.
Fed speakers continue to keep December Hike Alive
Comments during the week from Fed members Dudley, Rosengren, Harker, Evans and Fisher were all supportive of a rate hike in December. Fed Chair Janet Yellen concentrated more on the outlook for inflation during her speech this week. The topic of her talk was Macroeconomic Research After the Crisis and as such she was more focused on other policy tools that the Fed could use to guide help the U.S. economy keep the growth momentum undisturbed. Chair Yellen was able to make a remark about keeping the economy running hot, while at the same time not discounting a rate hike in December. The minutes from the September FOMC meeting showed a divided Fed membership, and as this week’s comments illustrated, there is little separating both factions, which could result in a unanimous rate hike in December.
Bank of America (BAC ) will get the reporting activity started next week, which will also feature results from Dow components IBM (IBM 154.45), Goldman Sachs (GS 170.52), Johnson & Johnson (JNJ 117.56), UnitedHealth (UNH 133.92), Intel (INTC 37.45), American Express (AXP 60.15), Travelers (TRV 115.08), Verizon (VZ 50.28), Microsoft (MSFT 57.42), General Electric (GE 28.89), and McDonald’s (MCD 114.09).
Volatility ( VIX: $16.12 + 2.64 ) rose 19.6% last week following a small gain of 7.5% the previous week remains at low levels. However, the rate of gain the last two weeks is a negative to stocks and favors the bears. The more volatile Ultra Vix ( UVXY: $ 17.58 ) + 1.69 or + 10.6% has remained subdued but seemed poised to go higher. Markets usually need higher volatility to go lower. However, low volatility is not standing in the way of the investment titans who are making massive billion-dollar bets that the stock market is approaching an imminent crash.
The EUR/USD lost 1.557 percent in the last week. The Euro is trading at 1.0995 after the USD rally has brought the pair under the 1.10 price level. The weekly high was 1.1204 on Sunday as the Asian session was underway and it was all downhill for the EUR. The EUO ( EUO: $ 24.91 ) + $ 0.98 or + 4.1% for the week. The EUO is the closed end Ultra Short Euro ETF trading above its 200 day moving average. The disappointing trade data out of China released on Wednesday night made the greenback stumble as it combined with weak earnings. Encouraging retail sales and producer prices kept the December rate hike alive even as the University of Michigan published an 11-month low consumer confidence survey.
Where To Invest October 2016
Economic Data
Retail Sales increased 0.6% in September while sales, excluding autos, rose 0.5%. Both results were in-line with the Briefing.com consensus estimates. Core retail sales, which exclude auto, gasoline station, building materials, and food services sales, were only up 0.1%.
Strength in auto sales (+1.1%) and gasoline station sales (+2.4%) drove the overall number, which was necessary to contribute to a positive report
Solid sales gains were also registered by building material, garden equipment and supplies dealers (+1.4%), sporting goods, hobby, book and music stores (+1.4%), and miscellaneous store retailers (+1.8%). Several areas saw a monthly sales decline, such as electronics and appliance stores (-0.9%), health and personal care stores (-0.5%), and general merchandise stores (-0.4%).
The key takeaway from the report is that consumer spending on goods continues at a modest pace (total retail sales +2.7% year-over-year) and will remain a positive input for third quarter GDP forecasts.
Category | SEP | AUG | JUL | JUN | MAY |
Retail Sales | 0.6% | -0.2% | 0.1% | 0.7% | 0.2% |
Excluding Autos | 0.5% | -0.2% | -0.4% | 0.8% | 0.3% |
Durable goods | |||||
Building Materials | 1.4% | -0.8% | -0.3% | 3.8% | -2.6% |
Autos/parts | 1.1% | -0.3% | 2.0% | 0.5% | -0.3% |
Furniture | 1.0% | -0.5% | -1.1% | 1.1% | 0.8% |
Nondurable goods | |||||
General Merchandise | -0.4% | -0.4% | -0.6% | 0.2% | -0.5% |
Food | 0.1% | 0.3% | -0.4% | 0.1% | 0.2% |
Gasoline stations | 2.4% | -1.4% | -2.2% | 2.2% | 1.7% |
Clothing | 0.0% | 0.5% | -0.1% | 0.2% | 0.4% |
e*retailing/non-store | 0.3% | -0.1% | 0.7% | 0.1% | 1.8% |
The University of Michigan’s Index of Consumer Sentiment dropped to 87.9 in the preliminary reading for October (Briefing.com consensus 92.4) from the final reading of 91.2 for September. The October reading is the second lowest level in the past two years.
The downturn was driven by a decrease in the Index of Consumer Expectations from 82.7 to 76.6.
The Current Economic Conditions Index, meanwhile, increased from 104.2 to 105.5.
There was some conjecture that the uncertainty surrounding the election may have contributed to the weakened outlook, but even if that was the case, the stronger connection was made that prospects for renewed gains for the Expectations Index in coming months will revolve more around larger wage increases, continued job growth, and the maintenance of low inflation.
The key takeaway from the report is that the Expectations Index is now at its lowest level in two years and it was driven there mostly by the sentiment of households with incomes below $75,000.
Category | OCT | SEP | AUG | JUL | JUN |
Sentiment | 87.9 | 91.2 | 89.8 | 90.0 | 93.5 |
Outlook | 76.6 | 82.7 | 78.7 | 77.8 | 82.4 |
Present conditions | 105.5 | 104.2 | 107.0 | 109.0 | 110.8 |
Where To Invest October 2016
Cycles
Approximately halfway through the month of October and thus far the market has been following historical trends reasonably closely. We have not seen a full-blown bout of “Octoberphobia” yet, and may not, however, as of Friday’s close the DJIA was down 102.11 points for the week, or – 0.56%, the S&P 500 was down 20.76, off 1% and the NASDAQ is off 78.24 or -1.5% both for the week. The three indexes have already exceeded their historical average losses for an election-year October.
Beyond election uncertainties the single biggest driver behind current market weakness appears to be the Fed. They did not raise rates at their last meeting, but the minutes of the meeting showed that some members of the board are ready to act this year. According to CME Group’s Fed-Watch Tool the current chances of a November increase are just 9.3% while a December rate increase has odds right around 70%. This is still not a sure thing, but it is leaning heavily in favor of higher rates by year-end.
If the Fed does raise rates in December it is quite likely the market will have a reaction similar to last December’s rate increase. Initially there will likely be a sign of relief that the Fed has finally taken action because the economy is perceived to be on solid ground and improving. This could send the market initially higher until reality sets back in and reality is just not as good as the forecasts would like. The labor market is arguably on stable footing with respectable job growth and the official unemployment rate is 5.0%. But U.S. growth (and global growth) is still tepid. Last Thursday’s poor import/export data from China is another confirming piece of data.
Following the likely positive initial response to a (potential) December rate hike and the subsequent return to reality, the market is likely to weaken, possibly at yearend and into early next year. This weakness combined with typical early-year, post-election year weakness has the potential to setup a solid rally later on in 2017 especially if Hillary Clinton wins the election. In the next chart DJIA’s performance in post-election years is presented.
In the above chart, “All Post-Election” years since 1953 is the baseline to which “All 1st Elected,” “Dem 1st Elected,” and “Rep 1st Elected” are compared. “All 1st Elected” years are the first years of a new president. “Dem 1st Elected” are first years of a new president that was a Democrat and “Rep 1st Elected” are new Republican presidents. For the first half of a post-election year all four are quite close. Under 1st Elected Democrats DJIA was weaker in January and February on average as a result of early losses in 2009. By the end of July DJIA’s performance begins to show significant deviation and by the end of the year DJIA has performed best under a newly elected, 1st-year Democrat. Should polls hold and Hillary Clinton become the next President, DJIA’s performance in 2017 could resemble the green line. If Donald Trump can defy odds and polls then DJIA could follow the path of the black line.
In the following table all Presidents and all post-election years since 1953 are listed. “1st Elected” years are shaded in grey and appear separately. These years are then broken down into Democrat and Republican. In total there have been nine “1st Elected” years since 1953, four went to the Democrats and five went to the Republicans. Of the five Republicans only G. H. W. Bush’s first year in office was accompanied by a DJIA gain. Democrats have an opposite record, only Carter suffered a DJIA loss in his first year. The dataset is small, but the differences between a newly elected Democrat and a newly elected Republican in their first year in office are stark. These differences further expand when DJIA data going back to 1897 is used. In this expanded data set DJIA averaged 15.1% under “1st Elected” Democrats compared to just 2.6% under “1st Elected” Republicans.
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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.
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