September 12, 2016
Market Strategies Newsletter – Sample Issue
Where To Invest September 2016
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 in September 2016
Best Stocks To Buy in September 2016
Stock Market Investing Strategies
Stock Options Trade Alerts
How To Trade Options
Proven Profits Trading Success
Results From Our Recent Trade Alerts:
134% Profits on HL Calls in 55 Days
51% Loss on TBT Calls in 3 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
18% Loss on QQQ Calls in 5 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
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$10,000 Trading Portfolio
Charles Moskowitz Discussion
Funds in Use $ 694
There are 4 Open positions:
Long 3 HL Sept 1.08 Calls
Written 3 HL Sept 6.00 Calls
Long 4 QQQ Sept Puts
Long 3 GLD Sept 126 Calls
BUT RATES ARE GOING UP FOR THE RIGHT REASON !!!
Week 36 was a truly minor loss of $9, bringing our YTD gains back down to $6493. Our funds in use are only $694. We have positions that are leaned to the traditional shorts for a falling market. Gold, although “non-correlated” generally acts better when there is a scare, and I think this week will qualify. We also added a small position in the QQQ puts on Friday afternoon during the countertrend rally from down 320 to down 250 in the Dow.
Although this is a small position, it is also done in conjunction with the recent activity of this account. In recent activity I have kept funds in use to a minimum so as not to get trapped in the kind of action we saw Friday. Unfortunately, we did not get short the HOG via the text earlier in the week, but anyone who has followed this account knows, I don’t chase trades.
The HOG puts were $ .80 and I bid $ .85, raised to .95 and when they traded $1.20 cancelled the bid. Yes, they closed $2.20, and the gain was great, but hindsight tends to work that way. If the market has truly turned for any significant move lower we’ll find plenty of places to play.
So, the event that turned things started with Mr. Draghi and ECB’s lack of changing rates and announcing more asset purchases. That was followed by our Fed members jawboning their way into the public awareness, giving us their interpretation of what our economic numbers mean to them. DOES EVERYONE NEED THEIR 15 MINUTES IN FRONT OF THE CAMERA ?? The numbers that are quoted are going to be revised, at least twice; new numbers will come later and the FED will have meetings that they can use to discuss these issues among themselves and make a decision. We don’t need all the inter-meeting lectures.
All the talk about rate raising because the economy is getting better is great, if it’s true and sustainable. I’m not an economist, just a trader and I don’t know. What I do know is that things are priced for perfection (as can be seen every time someone misses by a penny or lowers guidance) and part of that perfection is a low or zero interest rate environment. If you take that out of the equation you start from scratch and the numbers are not nearly as cheery as what we’ve had to work with up until now. Friday’s action shows that no matter what the reason, rising rates are bad for prices, at least in the short term…CAM
Market Strategies $10,000 Trading Account Trade Table
| DATE | TRADES | PRICE | COST | PROCEEDS | RESULTS |
| 09/09 | Bought 4 QQQ September 114 Puts | 0.76 | 304 | ||
| 09/08 | Sold 6 AAPL September 108 Calls ( 50% Loss Rule ) | 0.51 | 306 | 300 Loss | |
| 09/06 | Sold 3 GLD September 126 Calls( 100% Profit Rule Selling Half) | 1.94 | 582 | 291 Gain | |
| 09/01 | Bought 6 GLD September 126 Calls | 0.97 | 606 | ||
| 08/31 | Bought 6 AAPL September 108 Calls | 0.85 | 510 | ||
| 08/15 | Bought 4 WFM September 31 Calls | 0.72 | 288 | ||
| 07/06 | Sold 3 HL September 6.00 Calls written against remaining 3 lot long position | 0.52 | 156 | 156 credit | |
| 05/03 | Bought 3 HL September 3.50 Calls | 0.85 | 255 |
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
VIP Subscribers Members Area.
Remember, these trades are based on your participation in the
Subscriber Members Only
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MARKET Laboratory – Weekly Changes
Prices are copied from Barron’s Weekly and Yahoo Finance and may be incorrect.
| Dow
18,085.45 -406.51 -2.20% |
Nasdaq
5125.91 -123.99 |
S&P 500
2127.81 -52.17 -2.39% |
Transportation
7822.59 -124.20 -1.56% |
Russell 2000
1219.21 -32.62 -2.61% |
Nasdaq100
4681.53 -117.21 -2.44% |
| Gold (spot)
1330.10 +8.00 +0.6% |
Silver
1936.8 +0.2 0.0% |
Crude
45.88 +1.44 +3.2% |
Heating Oil
143.04 +2.08 +1.5% |
Unleaded Gas
1.3611 +0.0595 +4.6% |
Natural Gas
2.797 +0.005 +0.2% |
| VIX
17.50 +5.52 +46.1% |
Put/Call Ratios
S&P 100 152/100’s +19/100’s |
Put/Call Ratios
CBOE Equity 63/100’s -2/100’s
|
Bonds
166-27 -2-21 2.39%+0-15% |
10 Yr. Note
130-114-136 1.67%+0.10%
|
Copper
209.25 +1.45 +0.7% |
| CRB Inflation
Index 182.54. +2.55 +1.4% |
Barron’s* Confidence
69.0 +2.3 |
S&P100
942.62 -21.05 -2.18% |
5 Yr. Note
121-017 -057 1.23% +0.07%
|
Dollar
95.35 -0.53 -0.6% |
DJ Utilities
656.19 -16.92 -2.51% |
| AAII
Confidence Index
Long Term Average |
Bullish
29.7% +1.1%
38.74% |
Bearish
28.5% -3.0%
30.30% |
Neutral
41.8% +1.9% 30.96% |
M! Money
Supply +9.48% Aug 29th
|
M2 Money
Supply +7.06% Aug 29th
|
* 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 2111 2159
Dow 17,785 18,252
QQQ 113.30 117.80
Transports 7727 7890
NASDAQ 5045 51.80
$100,000 Trading Portfolio Stock Positions and Trades
Each stock is allocated a theoretical $ 5,000 share of the portfolio unless otherwise indicated.
| Symbol
|
Purchase Price | Purchase Date | Stop/Loss | Price/
Date Sold |
Profit/
(Loss) |
||
| FAST 150 | 42.09 | 09/08 | 40.60 09/09 | ( $ 224 ) | |||
| SCO 20 | 87.22 | 08/16 | |||||
| FAST 150 | 42.15 | 07/28 | 41.44 x | 41.44 09/09 | ( $ 107 ) | ||
| 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 | |||||
| SUN 300 | 29.50 | 02/23 | |||||
| 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 | |||||
Sco means stop close only
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.
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Market Strategies $100,000 Trading Account
There were two closed out option positions:
12 September AAPL 108 Calls were sold at $ 0.51 for a loss of $ 600.
Half of the Long GLD Sept 126 Calls were sold on the 100% profit Rule gaining $ 582.
The net loss for the week in options was $ 18.
The 150 FAST Shares were stopped out at $ 40.60 for a loss of $ 224.
In addition the 150 FAST bought July 28th was stopped out at $ 41.44on September 9th.
For the entire week the loss in both stocks and options amounted to $ 349
For the entire year on closed out trades, our hypothetical profits decreased by $ 349 to $18,794.
The options expire on the third Friday of each Month unless otherwise posted.
The Stock table has the following positions:
AA ( 2 ) , EYES (2),FAST, HL, MOS(2), NBGGY, REPR ,SAN, SCO, SPXU, SUN, TEXQY, 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 $64,501 for the 15 open long stock positions.
The Open Option Positions require $ 1,388.
This increases the margin requirement to $ 65,889.
The 6 written Hecla Call positions reduce the margin requirement by $ 312 which lowered the margin requirement to $ 65,577,
leaving $ 34,423 in cash.
Open position losses increased by $ 2,258 to a negative $ 11,875.
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.
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 Sept 114
8 lots |
Puts
0.76 |
09/09/16 | |||
| GLD Sept 126
6 lots Remain |
Calls
0.97 |
09/01/16 | 1.94
(Sold Half on 100% Profit Rule) |
09/06/2016 | $ 582 |
| AAPL Sept 108
12 lots |
Calls
1.01 |
08/31/16 | 0.51 | 09/08/2016 | ( $ 600 ) |
| HL Sept 6
Covered Write 6 lots Open |
Calls
0.52 |
0.52 | 07/06.2016 | $ 312 Credit | |
| HL Sept 3.50
6 lots remain |
Calls
0.85 |
05/03/16 | 1.99
(100% Profit Rule plus Gap) |
07/01/2016 | $ 684 |
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.
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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 | Manchester United MANU ( 0.06 vs 0.01 )
Atlanta Fed President Dennis Lockhart speaks about the economy and economic policy. Fed Governor Lael Brainard speaks about the state of the U.S. economy. JP Morgan Chase CEO Jamie Dimon speaks at the economic club in Washington, D.C. Applied Genetic Technolgies AGTC ( 0.08 vs -0.48 ) United Nat Foods UNFI ( 0.63 vs0.72 ) |
| TUESDAY | GMS GMS ( 0.47 )
Industrial Production and Retail Sales in China are released. The Small Business Optimism Index for August is reported. 14:00 hrs Treasury Budget ( NA vs -$64.4Bln )
Radiant Logistics RLGT ( 0.05 vs 0.05 ) |
| WEDNESDAY | Cracker Barrel CGRL ( 2.13 vs 1.97 ) Hain Celestial HAIN ( 0.57 vs 0.55 )
07:00 hrs MBA Mortgage Index 09/10 ( NA vs +0.9% ) 08:30 hrs Export Prices ex-agriculture August ( NA vs +0.3% ) 08:30 hrs Import Prices ex-oil August ( NA vs + 0.3% ) 10:30 hrs Crude Inventories 09/10 ( NA vs -14.513 Mln Bbls )
Apigee APIC ( -0.27 vs -0.38 ) Apogee Ent APOG ( 0.67 vs 0.50 ) CLARCOR CLC ( 0.69 vs 0.66 ) Lakeland Industries LAKE( 0.10 vs 0.50 ) Student Transportation STB ( 0.05 vs 0.07 )
|
| THURSDAY | Netsol NTWK ( 0.08 vs -0.07 )
The Bank of England meets and is expected to hold rates steady. 08:30 hrs Initial Claims 09/10 ( 263K vs 259K ) Continuing Claims 09/03 ( NA vs 2144K ) 08:30 hrs Retail Sales August ( -0.1% vs 0.0% ) Retail Sales ex-auto ( 0.3% vs -0.3% ) 08:30 hrs PPI August ( +0.1% vs -0.4% ) CORE PPI August ( +0.1% vs -0.3% ) 08:30 hrs Philadelphia Fed September ( 0.0 vs 2.0 ) 08:30 hrs Current Account Balance 2nd Qtr ( -$122.8Bln vs -$124.7Bln ) 08:30 hrs Empire Manufacturing September ( 0.0 vs -4.2 ) 09:15 hrs Industrial Production August ( -0.3% vs +0.7% ) Capacity Utilization August ( 75.7 vs 75.9 ) 10:00 hrs Business Inventories July ( 0.1% vs 0.2% ) 10:30 hrs Natural Gas Inventories 09/10 ( NA vs 36 bcf ) Oracle ORCL ( 0.58 vs 0.53 ) S&W Seed SANW ( 0.06 vs 0.05 ) |
| FRIDAY | Standard & Poors reviews credit ratings for Portugal and Russia. Moody’s reviews France’s credit rating.
08:30 hrs CPI August ( 0.1% vs + 0.0% ) CORE CPI August ( ).2% vs 0.1% ) 10:00 hrs Michigan Sentiment Sept ( 91.5 vs 89.8 ) 16:00 hrs Net Long Term TIC Flows July ( NA vs -$3.6Bln ) Leaders of the 27 European Union States excluding Britain discuss how to beef up the bloc after the Brexit vote. U.S. Oil Rig Count rose by seven Rigs to 414. The Nat Gas rig count rose by 4 to 92, and there are 2 rigs listed as miscellaneous making a total US rig count of 508. Crude closed stronger at $ 45.88 up $ 1.44.The total rig count is lower by 356 from a year earlier. Natural Gas closed the week also slightly higher for the week at $ 2.797 a small gain of just $ 0.005. |
Market Strategies Fundamentals
ECB President Mario Draghi took the punch bowl away and the apparent end to Central Bank stimulus. He effectively threw cold water on stocks and bonds.
The ECB Thursday decided not to expand its bond-buying programs, despite its concerns about persistently low inflation and sluggish economic growth. The apparent end to the willingness or ability of central banks to continue providing funds and buying assets may be ending. It appears both Japan and the U.S. are also in agreement. They probably had some conversations across the oceans.
It was the steepest drop since Brexit. In addition, Boston Fed President Eric Rosengren, usually in the past a dove on rates, said there is a “reasonable case” for increasing rates to avoid an overheating economy. Robert Kaplan, president of the Federal Reserve of Dallas said “we have the ability to be patient.” But that had little of a consequence to plunging markets.
The Dow Jones Industrials fell 406.51 points to 18,085.45, a drop of 2.20%. Every Dow 30 stock was down sharply, at least over 1%. Boeing ( BA: $ 128.53 ) down $ 4.37 and Caterpillar ( CAT: $ 80.79 ) – $ 2.75 were down the most, each losing 3.29% on the day. Coca-Cola ( KO: $ 42.27 ) – $ 1.36 or – 3.12% is now down 1.6% for the year. Boeing is now off 11% for the year. Disney ( DIS: $ 92.42 ) – $ 1.67 or down 1.77% on the day has now dropped 12% for the year. General Electric ( GE: $ 30.11 ) fell $ 0.93 or 3.0%; 3M ( MMM: $ 175.64 ) – $ 4.46 or -2.48% on the day and down 5.17% for the week. Newsworthy Apple ( AAPL: $ 103.13 ) – $ 2.39 or – 2.26%, while having a bad week was far from the worst. Home Depot ( 127.74 ) – $ 3.52 or -2.68% collapsed below its 200-day moving average.
| Index | Started Week | Ended Week | Change | % Change | YTD % |
| DJIA | 18491.96 | 18085.45 | -406.51 | -2.2 | 3.8 |
| Nasdaq | 5249.90 | 5125.91 | -123.99 | -2.4 | 2.4 |
| S&P 500 | 2179.98 | 2127.81 | -52.17 | -2.4 | 4.1 |
| Russell 2000 | 1251.28 | 1216.50 | -34.78 | -2.8 | 7.1 |
Declining issues on the NYSE rose to 2,952 vs Advancing issues of 172 while on Nasdaq the tally was 395 advancing vs 2,465 declining. Volume finally kicked into gear with declining volume on the NYSE over 4 billion shares making up 96%. On NASDAQ the down volume was 91% of the total.
The Generals, which have been buoyant throughout the last few months, were modestly sold led by Amazon ( AMZN: $ 760.14 ) – $ 12.30 or -1.6% for the week; is down from a new all-time high made last Wednesday at $ 790.79. AMZN made a key downside reversal but needs to close below its 50 day moving average at about $ 753 to confirm a bearish indication. Alphabet Inc ( GOOG: $ 759.66 ) off $ 11.80 or -1.5% for the week needs to gap down Monday and close below its 50 day M.A. at about $ 753.00 to confirm a bear trend. Should that occur a huge island top would have been formed. Microsoft ( MSFT: $ 56.21 ) – $ 1.46 or off 2.5% needs to close below $56, its 50 day m.a. to confirm a bearish move. Facebook ( FB: $ $ 127.10 ) + $ 0.59 or + 0.5% was the only member of the group to close higher last week. Its 50 day m.a. is way down at $ 122.50 where it is probably a buy. Apple, which we discussed above fell below its 50 day m.a. at about $ 103.80 is now just barely above its 200 day m.a. at about $ 102.50.
The Transportation Index fell 1.6% last week which was the smallest decline of any index. The airlines bounced back last Wednesday with a big gain of 3.1%. The U.S. Global jets ETF ( JETS: $ 23.17 ) + $ 0.42 or + 1.9% on the week. It was the only ETF to be up last week. It even extended above its 200 day moving average on Wednesday and Thursday.
The Russell 2000 was the worst performer last week, off 2.8%: The Russell of all the indexes is the most averse to higher rates. Matson ( MATX: $ 38.19 ) – $3.85 or -9.2% reversed course after having been the biggest winner, up 15.59% the previous week.
Rate hike expectations edged up when compared to last Friday. The implied likelihood of a rate hike in September inched up to 24.0% from last week’s 21.0% while the implied probability of a December hike climbed to 58.4% from 54.2%.
The US dollar ( DXYO: 95.35 ) – 0.53 or minus 0.6% was losing all week but made back half its losses with the hawkish Fed statements. The Greenback had been down as low as 94.46, which would have been a loss of 1.5%.
Volatility rose sharply. The VIX Short-Term Futures ( VXX: $ 38.89 ) + $ 4.09 or + 10.5% for the week. The Pro-Shares Ultra VIX Short-Term Futures ( UVXY: $ 22.42 ) + $ 4.15 or + 22.8% fell to a new all-time low at $ 16.76 before reversing sharply.
Volatility reversed course going sharply higher. The VIX rose 46.1% this past week following a gain of 20.3% the previous week making a total gain of 66.4% the past 2 weeks. Before the past two weeks low volatility had supported the rally.
On Saturday (September 10) the Taiwan equity market sold off 1.2%, its biggest decline in two months as well. This may be a hint of what is going to happen when Asian equity markets on September 12.
The S&P 500 suffered its biggest decline in two months, falling 2.4% ahead of the weekend. It gapped lower and sold-off sharply and closed on its lows. It is a particularly poor sign. This is not the kind of gap that is quickly closed. Volume rose solidly across the board leaving no doubt about institutional selling.
The MSCI Asia-Pacific Index fell on both Thursday and Friday. This was the first two-day loss in a month. Friday’s 1.2% decline was the largest since early August. This much-watched index enjoyed a 15% rally since the end of June, and at the very least, a technical correction of this advance is likely unfolding. The first target is the late-August low near 137.20, which is about 2.3% below last week’s close, but the 38.2% retracement objective is found at 135.35. That suggests scope for a 3.6% decline. Ahead of the quarter-end asset managers may be tempted to protect profits
The Fed fear of raising rates is a phenomenon that is more of an excuse than a reality. There may be more likely of a chance of rates rising before the end of this year but that is inconsequential compared to the task for businesses to improve earnings. It will not be surprising if the Fed winds up doing nothing until next year.
As retail goes, so goes the nation. Just look at Dillards ( DDS: $ 58.06 ) – $ 8.06 or -12% for the week. Dillards made its high for the year last April at $ 144.21 and is now down 60% from its highs. Macy’s is not doing much better: ( M: $ 35.48 ) – $ 4.33 or – 10.9% last week and off 51% from its high last April at $ 72.31. Small specialty stores with great products like Whole Foods Market ( WFM: $ 28.60 ) – $ 1.82 last week or – 6% and off 50.3% from its yearly highs. Costco ( COST: $ 150.70 )-$ 5.51 or – 3.5% has by far done the best of all brick and mortar retailers having equaled its high last year at the $ 169 level. Wal-Mart Stores has also done better ( WMT: $ 70.30 ) – $ 2.54 or -3.2% on the week is having trouble at its 200 day moving average at about $ 73.80 ) but has still outperformed most other retailers.
S&P multiples are at highs and it seems to us that the market needs to take a breath before it is going to be able to move up. Market participants have been predicting a 10% to 20% correction for the last six months. This could be on its way. Rate hike fears are just an excuse. There is weakness across the board in earnings. Wage costs across the board are on the rise while prices are declining. Just look at grocery prices and notice the difficulty for retail chains to eke out even a small profit.
Market Strategies Economic Data
The ISM Non-Manufacturing Index for August was a big disappointment, dropping to 51.4 (Briefing.com consensus 54.7) from 55.5 in July. The August reading was the lowest reading for this index since February 2010.
The line between expansion and contraction for this report is 50.0. Accordingly, the non-manufacturing sector is still operating in an expansion mode, albeit at a much slower pace. August 2016 marks the 79th straight month of expansion for the non-manufacturing sector.
There was a sharp downturn in the indexes for new orders (to 51.4 from 60.3), new export orders (to 46.5 from 55.5), and inventories (to 48.0 from 54.0).The Business Activity/Production Index dropped to 51.8 from 59.3 while the Prices Index slipped to 51.8 from 51.9.
The report summary noted that, “The majority of respondents’ comments indicate that there has been a slowing in the level of business for their respective companies.
| Category | AUG | JUL | JUN | MAY | APR |
| Non-Manufacturing ISM index | 51.4 | 55.5 | 56.5 | 52.9 | 55.7 |
| Business Activity | 51.8 | 59.3 | 59.5 | 55.1 | 58.8 |
| New Orders | 51.4 | 60.3 | 59.9 | 54.2 | 59.9 |
| Employment | 50.7 | 51.4 | 52.7 | 49.7 | 53.0 |
| Deliveries (nsa) | 51.5 | 51.0 | 54.0 | 52.5 | 51.0 |
| Inventories (nsa) | 48.0 | 54.0 | 55.5 | 54.0 | 54.0 |
| Exports (nsa) | 46.5 | 55.5 | 53.0 | 49.0 | 56.5 |
| Imports (nsa) | 50.5 | 53.0 | 54.0 | 53.5 | 54.0 |
| Prices Paid | 51.8 | 51.9 | 55.5 | 55.6 | 53.4 |
The key takeaway from the report is that it appears as if both the manufacturing sector and the non-manufacturing sector experienced a noticeable slowing of activity in August. The added takeaway is that the slowdown seen on both sides of the economy will likely leave the Fed reluctant to raise the fed funds rate at its September meeting.
The Jolts-Job Openings Report is beyond robust, hitting a new record high and perhaps suggesting the economy is not damaged by poor economic numbers. The pace of hiring activity, however, leaves a much different impression.
One of the labor market’s biggest mysteries just got deeper: The number of job openings available at the end of July climbed to a new record of 5.9 million. Yet the number of people actually being hired into one of those jobs was 5.2 million for the second month in a row.
The number of unemployed workers per job opening has fallen to 1.3, the lowest since 2001. People simply aren’t being hired into the positions at rates like in the past. About 300,000 fewer people are being hired each month compared with the pace reached in February. During the entire economic recovery, the U.S. has yet to notch a month of hiring that matches the pace seen at the heights of the middle of last decade or the early 2000s.
That was, in fact, one of Janet Yellen’s contentions when she testified to Congress back in June – even after the poor May jobs report that was released just a few weeks prior to her appearance on Capitol Hill. “Obviously our job at the Fed is to make sure we have a strong job market that there are enough jobs that are being created”…Looking at training programs and educational opportunities, I think that’s a piece of the puzzle as well. She cited a “mismatch” between the robust jobs supposedly available and the skills possessed by the potential supply of labor.
Market Strategies Cycles
Psychological: Troubling. According to the most recent Investor’s Intelligence Advisor Sentiment survey bullish sentiment is still frothy. Bullish advisors stood at 56.7%, Bearish advisors were at 20.2%, while correction advisors are at 23.1%. The spread between bulls and bears remained at its highest level since early 2015 when the market last stalled. Although bullish sentiment is elevated, if does not mean a meaningful correction or pullback is imminent. Sentiment can remain highly bullish for extended periods of time especially if the market remains resilient.
Fundamental: Mixed. Second quarter earnings for S&P 500 companies were down 1.8% year-over-year, but better than the expected decline. Excluding energy the results would have been positive. New home sales surged in July, but existing home sales fell in July for the first time since February. July payroll gains were a whopping 255k and the unemployment rate held at 4.9%. Consumer speeding also rose for the fourth straight month in July. U.S. Q2 GDP was revised down to 1.1%. It seems for every positive there is an offsetting negative that is keeping overall progress in check. Fewer negatives are needed in order for the fundamental landscape to improve.
Technical: Range bound. DJIA, S&P 500 and NASDAQ all broke out to new all-time highs, Russell 2000 has not. Since the breakout momentum has waned and the major indices have slipped into a narrow trading range. DJIA, S&P 500 and NASDAQ have been essentially moving sideways for at least a month. Russell 2000 has climbed modestly higher. Stochastic, relative strength and MACD indicators all confirm the loss of momentum.
Monetary: 0.25-0.50%. The next Fed announcement is currently scheduled for September 21 and it will be accompanied by a Summary of Economic Projections and a press conference. Past projections have proven overly optimistic and this time will likely be no different. The Fed has repeatedly stated its data dependent nature and inflation is not where they want it. The multi-year trend is still lower, not higher even though there has been a modest pickup in CPI and PPI this year.
Seasonal: Bearish. Since 1950, September is the worst performing month of the year for DJIA, S&P 500, NASDAQ (since 1971), Russell 1000, and Russell 2000 (since 1979). September’s performance does improve slightly in election years, but it is still negative nearly across the board. Only the Russell 1000 and Russell 2000 have been able to escape negative territory and post modest 0.2% and 0.7% average gains.
Since the post-Brexit rally and the break to new all-time highs the market has been on summer vacation. The blue chips have been off the grid, virtually flat since mid-July. Techs and small caps have been a bit stronger, but less so since mid-August. Only the small caps have been able to gain any ground the past two weeks.
This lack of momentum has been accompanied by even greater bullish sentiment with Investors Intelligence Bullish Advisors % moving up to 56.7%, its highest level since mid-2015 – and it’s been over 50% for seven weeks now. CBOE Weekly Equity Only Put/Call ratio has been equally as complacent over the past two months in the 0.56-0.67 range.
The recent lack of momentum, added to all this frothy sentiment increases the risk of a pullback or correction in the near term. Mixed fundamental readings are not much help, but there may not be enough good economic and corporate data to support the market and avoid a major pullback at this time, with geopolitical risks increased with North Korea revving up.
It has been a usually quiet stretch for the market over the last month and a half or so since mid-July. After breaking out to new all-time highs in July, S&P 500 settled into a narrow range between 2140 and just under 2200. During this time S&P 500 has not had a daily move in excess of +/- 1% (on a closing basis) in 43 trading days including today. July 8 was the last day S&P 500 recorded a move exceeding 1%.
In late August we noted the streak at 33 trading days. At that duration (and under the assumption that the streak would likely end soon) the subsequent trading action of all similar or longer past streaks was relatively benign. S&P 500 was up 1-Month after streaks of 33 or more trading days 50.9% of the time, but with an average loss of a modest 0.14%. 3-, 6- and 12-months later S&P 500 was up 60-70% of the time with respectable average gains. The 33-day streak table can be viewed here.
Since this is an election year and WSM is on the cusp of great and OK, we broke out these election years. This table indicates that the greater the election year WSM gains are, the greater the likelihood of gains in the subsequent BSM, this year and next. However, as you can see from this table and the Bad WSM table, the post-election year, next year, is prone to weakness across the board.
As of today’s close, S&P 500 has extended its streak of not exceeding +/– 1% to 43 trading days. When past streaks of 43 trading days or longer are examined there is a clear shift in S&P 500’s subsequent performance. At the 1-month point after such streaks ended S&P 500 turns more bearish advancing just 42.9% of the time and the average loss extends to –1.12%. Its 1-month median performance also takes a dive from positive 0.09% to negative 1.30%. Friday’s loss in itself was 1.98% and Monday could be a duplication which would all but wipe out the year’s gains.
Looking ahead the data bears out further reduction in subsequent performance when S&P 500 extended its streak beyond 53 trading days (shaded in light grey). At 53 trading days and beyond, 1-, 6- and 12-month later performance declines even further. History suggests the longer the current streak without a +/– 1% S&P 500 daily move runs, the greater the odds become for declines after it ends.
Sell in May Finally Comes Through
In the face of all this low volatility, the market has held on to its Worst Six Months gains, bringing out once again the Sell in May naysayers until yesterday. However, a look at page 32 and 62 of the Stock Trader’s Almanac 2016 will remind you that the Worst Six Months has been quite strong in election years. The positive mindset of electing a new commander in chief helps buoy U.S. equities throughout the second half of the year with only two losses in the last seven months of election years. This year, however, the Market P/E has gone well beyond the fundamentals.
The S&P 500 was up about 5.8% until Friday when its fell 1.98%. The remaining +4% could disappear quickly. With seven weeks left in the current WSM, the September/October disaster area is Here.
Undervalued Small Cap Stocks
Lower Priced stocks that look to be a buy:
Repro-Med Systems,Inc ( OTCQX: REPR 0.43 )*
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.
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.
Enzo Biochem ( ENZ: $ 5.61 ) The stock moved from approximately $5 a share to approximately $7.00 from May 1 to July. If you look at the chart pattern of the stock the big volume came in on May 9 which coincided with the Louis Navellier recommendation. He recommended 5 stocks of which 3 (including Enzo) all had similar chart patterns with significant increases in trading volume. I don’t know how much of that volume came from individual investors but the buying had lots of 100-500 share trades which tells me that individuals, not institutional investors were strong buyers of Enzo.
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. I noticed when the stock cleared the $7 level that 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 approaching oversold territory and as the fear grows the 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 0.56 ) *
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 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.
Gold Mining USA OTC: GMUI ( 0.055 )* Has both mining activities in Australia and the U.S. 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. 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.
The company has signed an ongoing agreement with Cardno, a professional infrastructure and environmental services company, to assist in the evaluation and implementation of a work program on one of its North America properties. Steve Craig, a well-known Certified Professional Geologist, will be heading up the efforts on the project.
Night Food, Inc. ( NGTF.0.20 )* 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: $ 0.08 )y 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 has 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. Installations into hospitals located in the States of New South Wales, Queensland, Northern Territory, Western Australia, South Australia, Tasmania and Australian Capital Territory might follow later.
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 made two closes over the 200day M.A. on August 11th and 12th thus taking us out of a short position. We were stopped out of the long HOG on August 29th. We are still very much interested in the Flushing Financial and finally bought FFIC at our theoretical buy limit. You should have bought the HDGE on a close above 9.65.
| Name | Business Description | PE | P/S | MV mln | Price | Buy or Sell Limit | Stop Loss
Or offset |
|
| CL | Colgate Palmolive | Consumer Goods; Personal products like toothpaste | 49-24 | 4.24 | 66.8B | 70.86 | 73.76 sold short | Sell at 73.76
on Sept 7th |
| DY | Dycom | Materials. Construction Cell Towers internet Infrastructure | 25 | 1.1 | 2.7B | 81.65 | 75.71
Look for new entry |
92x stopped out on 8/10/16 |
| BA | Boeing | Aerospace, commercial jetliners, military systems | 14 | 0.85 | 81B | 128.53 | Buy at 132
200 day m.a. |
131.20sco
Bought and stopped out |
| HL | Hecla Mining | Basic Materials | 44 | 3.61 | 1.7B | 5.67 | 3.95 | 6.40scostopped out on 8/22/16 |
| FFIC | Flushing Financial | Bank Holding company Savings and loans | 13 | 3,5 | 592Mln | 23.12 | 19.10
06/27 |
19.90x |
| SUN | Sunoco | Oil and Gas Refining and marketing | 10 | 0.2 | 2.1B | 29.77 | 29.50
06/27/16 |
29x stopped out 8/04/16 |
| AA | Alcoa | Aluminum Processing and Technology | N/A | 0.4 | 9.5B | 9.60 | 7.05 originally bought 2/8/16 | Must hold 10
No new position |
| HOG | Harley Davidson | Motorcycles and related products | 11 | 1.32 | 8B | 50.57
|
45 bought June 10th
|
Stop was at 51.50 stopped out 08/29 |
| CHD | Church & Dwight | Consumer Products Sodium bicarbonate Arm and Hammer | 25 | 3 | 10.6B | 47.39
Stock split |
79.80 bought
01/26/16 |
Sold at 94.20 |
| T | AT&T | Communications | 36 | 1.54 | 211.7B | 39.71 | 34.10 | No Current position |
| VA | Virgin Air | Regional Airlines | 7.2 | 0.9 | 1.5B | 55.95 | 30.30
Bought |
Merging with Alaska |
| ENZ | Enzo Biochem | Life Sciences | NA | 1.35 | 134M | 5.71 | 6.05
Originally bought at $ 2.78 8/24/15 |
5.68x stopped out on 08/24 looking for new entry |
| BAC | Bank of America | Commercial Bank | 10 | 2.02 | 165.3B | 15.74
|
13.34
07/11/16 |
14.60x |
| HDGE | Advisor Shares | Ranger Bear ETF | 9.69
|
Buy a close over 9.65 the 13 dma | 9.47sco if bought above the 13 |
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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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