Where To Invest in July 2016
June 20, 2016
Market Strategies Newsletter – Sample Issue
Read the June 20, 2016 Where To Invest in July 2016
Market Investing Strategies Newsletter – Here
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 July 2016
Best Stocks To Buy in July 2016
Stock Market Investing Strategies
Stock Options Trade Alerts
How To Trade Options
Proven Profits Trading Success
Results From Our Recent Trade Alerts:
58% Profits on SUN July 30 Calls in 3 Days
85% Profits on SPY June 209 Puts in 3 Days
16% Profits on AA July 9 Calls in 2 Days
82% Profits on SLV June 15 Calls in 2 Days
51% Profits on AA June 9 Calls in 7 Days
49% Loss on TGT June 70 Calls in 12 Days
159% Profits on AA June 9 Calls
157% Profits on NEM June 35 Calls in 4 Days
6% Loss on XLF June 23 Puts in 12 Days
40% Loss NEM June 34 Calls in 5 Days
107% Profits on SIG May 105 Puts in 14 Days
28% Profits on NEM May 33 Calls in 13 Days
50% Loss on FB May 121 Calls 50 in 7 Days
105% Profits on SIG May 105 Puts in 14 Days
97% Profits on SJM May 125 Puts in 7 Days
27% Profits on QQQ May 109 Puts in 7 Days
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$10,000 Trading Portfolio
Charles Moskowitz Discussion
There are 5 Open positions:
Long 6 HL Sept 3.50 Calls
Long 4 PYPL July 38 Calls
Long 6 AA July 9 Calls
Long 6 QQQ July 109 Calls
Long 10 TBT July 35 Calls
Funds in Use $ 2582
Are Authority Figures Always Right ???
We took some small gains in AA, as the market looked week on Wednesday near the close and put them back on during the Thursday morning selloff once it started to recover. While these might look like trades that we could have weathered, I didn’t know that Wednesday. We had paid $ .68 for the AA calls and sold them @ $ .79, to buy them back @ $ .63. It might not seem like a lot to gain, but my concern was that AA would fall further and test the recent lows around $8.78-9.00. At that point we would have been at or very near the 50% Down Rule level and would had to be a seller. As it turned out, it was a 25% gain followed by the repurchase and a Friday close of $ .83, a 32% gain. As Bernard Baruch said, “You never go wrong taking a profit.”
What do we really think about the FOMC non-move and statement? Well, I think that we should all ignore it. My point is that they have missed the opportunity to raise rates when they could (and should) have back when we had job growth of 250,000 a month way back when. The case in point is Alan Greenspan. He served as Fed Chairman from 1987 to 2006. Greenspan came to the Federal Reserve Board from a consulting career. Although he was subdued in his public appearances, favorable media coverage raised his profile to a point that several observers likened him to a “rock star“. While he warned us about “irrational exuberance” in December 1996, the level of the S&P500 went from the 730 level, and by the time he was right, that broad market index was as high as 1,550. After leaving the position and seeing the Dot Com bubble and then the housing debacle he was asked why he had kept interest rate so low for such a long time, his response was “I didn’t think it would be this bad.” Another one is Barney Frank, whose name is attached to his “landmark bill,” Dodd-Frank. It raised both the capital requirements and compliance costs for the banking industry dramatically. While he talks about what important legislation this is to protect the average citizen against the banking behemoths, it has forced hundreds of community banks out of business.
The problem is that we take the words of these authority figures too much to heart. When you go into your doctor’s office and the man (or woman) comes in in their white coat and gives you advice, they have spent 8 or 10 years being educated and tested in their specialty. Their advice has been tested, you can count on it. Politicians have none of that specialized training, and they want to “leave their mark” for posterity. This causes them to delve into areas that they see have problems but they just don’t have the expertise to see the unintended consequences of their actions. They also focus on the events past, not the new problems that will arise. I believe that their actions are well intentioned, but they really haven’t got a clue.
Bernie Madoff is a good example. All of the reporting requirements and all of the Sarbanes-Oxley rules were put into place, but you can’t stop a fraud that involves outright lying, much as you can’t stop terrorism without having the imagination for things not yet tried.
We all know when things aren’t great. We all see when food and gas prices hurt our pocketbooks and we certainly know that Social Security won’t cover our expenses even if we can retire. These are the issues we need to follow, certainly not the untrained bureaucrats telling us how to protect ourselves…CAM
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Market Strategies $10,000 Trading Account Trade Table
| DATE | TRADES | PRICE | COST | PROCEEDS | RESULTS |
| 06/17 | Sold 6 SUN July 30 Calls | 0.95 | 570 | 210 Gain | |
| 06/16 | Bought 6 QQQ July 109 Calls | 1.24 | 744 | ||
| 06/16 | Bought 6 AA July 9 Calls | 0.63 | 378 | ||
| 06/16 | Bought 6 SUN July 30 Calls | 0.60 | 360 | ||
| 06/15 | Sold 6 AA July 9 Calls | 0.79 | 474 | 66 Gain | |
| 06/14 | Bought 10 TBT July 35 Calls | 0.51 | 510 | ||
| 06/14 | Bought 6 AA July 9 Calls | 0.68 | 408 | ||
| 06/13 | Sold 4 SPY June 209 Puts | 1.75 | 700 | 208 Gain | |
| 06/10 | Bought 4 SPY June 209 Puts | 1.23 | 492 | ||
| 06/08 | Bought 4 PYPL July 38 Calls | 1.10 | 440 | ||
| 05/03 | Bought 6 HL September 3.50 Calls | 0.85 | 510 |
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
17,675.16 -190.18 -1.06% |
Nasdaq
4800.34 -94.21 |
S&P 500
2071.22 -24.85 -1.19% |
Transportation
7589.84 -175.01 -2.25% |
Russell 2000
1144.70 -19.23 -1.65 % |
Nasdaq100
4374.38 -86.67 -1.94% |
| Gold (spot)
1292.50 +19.10 +1.5% |
Silver
1741.1 +8.1 +0.5% |
Crude
47.98 -1.09 -2.2% |
Heating Oil
148.17 -3.43 -2.3% |
Unleaded Gas
1.5202 -0.0511 -3.3% |
Natural Gas
2.623 +0.067 +2.6% |
| VIX
19.41 +2.38 +12.3% |
Put/Call Ratios
S&P 100 150/100’s -87/100’s |
Put/Call Ratios
CBOE Equity 72/100’s +5/100’s
|
Bonds
169-05 +26 2.43% -0.01% |
10 Yr. Note
131-274+104 1.61%-0.02%
|
Copper
295.10 +2.05 +1.0% |
| CRB Inflation
Index 192.38. -0.51 -0.3% |
Barron’s* Confidence
64.3 -2.0 |
S&P100
914.95 -11.80 -1.27justbet% |
5 Yr. Note
121-16+096 1.12% -0.04%
|
Dollar
94.16 -0.51 -0.5% |
DJ Utilities
686.58 +5.96 +0.88% |
| AAII
Confidence Index
Long Term Average |
Bullish
25.3% -2.5%
38.74% |
Bearish
37.5% +9.7%
30.30% |
Neutral
37.2% -7.2%
30.96% |
M! Money
Supply +8.06% June 6th
|
M2 Money
Supply +6.88% June 6th
|
* 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 2050 2096
Dow 17,520 18,000
QQQ 104.60 108.40
Transports 7345 7735
NASDAQ 4700 49.40
$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) |
||
| PYPL 150 | 37.65 | 06/08 | |||||
| SCO 20 | 89.28 | 05/13 | |||||
| HL 1000 | 3.95 | 05/03 | |||||
| MOS 200 | 27.53 | 05/02 | |||||
| NVAX 500 | 5.38 | 04/18 | |||||
| SCO 20 | 109.88 | 04/12 | |||||
| EYES 500 | 5.04 | 04/04 | |||||
| SUN 300 | 29.50 | 02/23 | Expired worthless on 6/17 | Sold 3 32.50 Calls | $ 900 credit | ||
| 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.
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Market Strategies $100,000 Trading Account
There were four closed option positions all profitable:
8 SPY June 209 Puts were sold on for a gain of $ 416.
12 SUN Calls bought June 16th and sold the next day made $ 420. However, the big gain was from the worthless expiration of the 3 June 32.50 SUN Calls sold February 23rd and expiring worthless on June 17th.
Alcoa July $ 9 Calls bought June 14th and sold the next day gained $ 132.
For the entire year on closed out trades, our hypothetical profits increased to $15,180.
The options expire on the third Friday of each Month unless otherwise posted.
The Stock table has the following 16 positions:
AA, EYES(2), HL, MOS(2), NBGGY, NVAX, REPR,
SAN, SCO(2), SUN, TEXQY, TWTR and 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.
The money management is based on a hypothetical $ 100,000.
We are using a total of $65,092 for the 15 open long stock positions.
The Open Option Positions require $ 5164.
This increases the margin requirement to $ 70,256,
leaving $ 29,744 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.
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 July 109
12 lots |
Calls
1.24 |
06/16/16 | |||
| AA July 9
12 lots |
Calls
0.63 |
06/16/16 | |||
| SUN July 30
12 lots |
Calls
0.60 |
06/16/16 | 0.95 | 06/17/2016 | $ 420 |
| TBT July 35
20 lots |
Calls
0.51 |
06/14/16 | |||
| AA July 9
12 lots |
Calls
0.68 |
06/14/16 | 0.79 | 06/15/2016 | $ 132 |
| SPY June 209
8 lots |
Puts
1.23 |
06/10/16 | 1.75 | 06/13/2016 | $ 416 |
| PYPL July 38
8 lots |
Calls
1.10 |
06/08/16 | |||
| HL Sept 3.50
12 lots |
Calls
0.85 |
05/03/16 | |||
| SUN June 32.50
Expired Worthless |
Calls
0.00 |
06/17/16 | 3.00 | 02/23/2016 | $ 900
|
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 | Jazz Pharmaceuticals provides an investor update. Official earnings are not due until August 3rd
Commerce Secretary Penny Pritzger and president Barack Obama address Commerce’s U.S. Investment Summit.
Minneapolis Fed President Neel Kashkari participates in a symposium on “ Ending Too Big to Fail” |
| TUESDAY | CarMax KMX ( 0.92 vs 0.86 ) Lennar LEN ( 0.87 vs 0.79 )
Fed Chair Janet Yellen gives her semi-annual monetary policy report before the Senate Banking Committee. Fed Chair Yellen and treasury Secretary Jacob Lew attend an open meeting of the Financial Stability Oversight Council. Treasury Secretary Lew and Sec of State John Kerry address the Commerce Investment Summit
Adobe Systems ADBE ( 0.68 vs 0.48 ) FedEx FDX ( 3.28 vs 2.66 ) Itron ITRI ( 0.34 vs 0.20 ) KB Home KBH ( 0.17 vs 0.10 ) La-Z-Boy LZB ( 0.48 vs 0.38 ) |
| WEDNESDAY | Actuant ATU ( 0.37 vs 0.63 ) Eros International EROS 0.04 vs 0.30 ) SiteOne Landscape Supply SITE ( -0.14 ) Winnebago Industries WGO ( 0.45 vs 0.43 )
07:00 hrs MBA Mortgage Index 06/18 ( NA vs -2.4% ) 09:00 hrs FHFA Housing Price Index April ( NA vs +0.7% ) CORE PPI May ( +0.1% vs +0.1% ) 10:00 hrs Existing Home Sales May ( 5.50Mln vs 5.45Mln ) 10:30 hrs Crude Inventories 06/11 ( NA vs -0.933 Mln Bbls ) Fed Chair Yellen reprises her testimony before the House Financial Services Committee. Greek prime Minister Alexis Tsipras speaks at the European Parliament. Apogee Enterprises APOG ( 0.49 vs 0.41 ) Barnes & Noble BKS ( -0.24 vs -0.37 ) Bed Bath & Beyond BBBY ( 0.86 vs 0.93 ) Herman Miller MLHR ( 0.52 vs 0.47 ) H.B. Fuller FUL ( 0.68 vs 0.63 ) Nantkwest NK ( -0.13 ) Red Hat RHT ( 0.50 vs 0.44 ) Steelcase SCS (0.16 vs 0.17) |
| THURSDAY | Accenture ACN ( 1.41 vs 1.30 ) BlackBerry BBRY ( -0.08 vs -0.05 ) carnival CCL 0.38 vs 0.25 Commercial Metals CMC ( 0.30 vs 0.58 ) Methode Electronics MEI ( 0.53 vs 0.68 )
08:30 hrs Initial Claims 06/18 ( 273K vs 277K ) Continuing Claims ( 2161K vs 2157K ) 10:00 hrs New Home Sales May ( 560K vs 619K ) 10:00 hrs Leading Economic Indicators 10:30 hrs Natural Gas Inventories 06/18 ( NA vs 69bcf ) General Electric holds a digital investor meeting The U.S. International Trade Commission issues a decision in one of Cisco Systems’ patent suits against Arista Networks.
Sonic SONC ( 0.42 vs 0.36 ) Synnex SNX ( 1.30 vs 1.55 ) |
| FRIDAY | Finish Line FINL ( 0.23 vs 0.30 )
08:30 hrs Durable Goods Orders May ( -0.6% vs +3.4% ) 08:30 hrs Durable Goods Orders ex-transportation May ( 0.1% vs 0.4% ) U.S. Oil Rig Count increased the third week in a row. Nat Gas rig count increased by 1 to 86. The oil rig count grew by 9 to 337 making a total US rig count of 423. July Crude closed at $ 47.98 off $ 1.09 for the week. Natural Gas closed the week at $ 2.623, plus 0.067. Last year at this time crude was at $ 50.78, while N.G. traded at $ 2.880. Oil drillers had 635 rigs online at this time last year after reaching a peak of 1,609 in October 2014. |
Market Strategies Fundamentals
Stocks had another lackluster week mostly to the benefit of the bears as brexit created more uncertainty than even the Fed. The DJ Transportation index was again a substantial loser off 175 points to 7,589.84 or -2.25% to lead all Indexes lower. The airlines continued to sell off as indicated by the ETF ( JETS: $ 21.54) – 1.53 or -6.6% for the week. The Nasdaq ( 4800.34 ) – 94.21 or – 1.92% was second worst index led by the generals, the largest companies seeming to be rolling over.
Apple ( AAPL: $ 95.33 ) – $ 3.50 or -3.5%, the world’s largest company with a market cap in excess of $522 B appears to be rolling over. Microsoft the third largest ( MSFT: $ 50.13 ) – $ 1.35 or – 2.6% was lower last week. The same goes for Alphabet, number 4 ( GOOG: $ 691.72 ) – $ 27.69 or -3.9% for the week. Amazon ( AMZN: $ 706.39 ) – 11.32 or – 1.6% not yet in the Fab Five largest company group, appears to be topping. Johnson and Johnson ( JNJ: $ 115.48 ) – $ 1.53 or -1.3% wth a market cap in excess of $ 304Bln, the world’s fifth largest company is also stuggling at these levels. Facebook ( FB: $ 113.02 ) – $ 3.60 or -3.1% is also week and has rised in prominence to # 14 largest company.
Exxon Mobil Corp ( XOM: $ 90.71 ) + 0.74 or +0.8% , second largest company, was the lone winner in the Fab Five largest group. The oil rig count rose for the third straight week but only the best capialized companies can benefit from the modest improvement in oil prices. The banks are still under pressure.
The Dow fell 190 points or 1.06% to 17,675. Bank stocks look to be in trouble.
Health Care was the worst performing Dow Industrial Group losing 2.12%.The Spider Select Sector Health Care ETF ( XLV: $ 70.06 ) fell below its 50 day moving average for the first time since March 17th. The key for the XLV to maintain its bullish status will come into play at $ 69.50 whether it can hold the 200 day m.a. It is likely a buy there first time down.
Gold prices on Globex closed at $ 1300.10, at 2PM Pacific time, the first time gold prices rose above that key $ 1300 mark since July 2014. Cash Silver also improved by $5/oz to $ 1745. Cash Gold ( Gold Spot: $1300.10 ) is up $ 242.10 on the year or + 23%, having closed the year 2015 at $ 1,058. The Spider Gold trust ETF ( GLD: $ 123.95 ) is up from $ 101.70 a gain of 22% since the end of 2015.
In the latest Commitment of Traders report (COT), we saw speculative long positions “blow-out” to extreme levels as we have clearly taken out the previous extreme bullish position from a few weeks ago. “Brexit” is clearly pushing money managers into becoming gold bulls, but do these extreme levels of speculative longs make this camp a dangerous one to be in? Are we in double top areas?
We will get a little more into some of these details, but before that let us give investors a quick overview into the COT report for those who are not familiar with it.
About the COT Report
The COT report is issued by the CFTC every Friday to provide market participants a breakdown of each Tuesday’s open interest for markets in which 20 or more traders hold positions equal to or above the reporting levels established by the CFTC. In plain English, this is a report that shows what positions major traders are taking in a number of financial and commodity markets.
Though there is never one report or tool that can give you certainty about where prices are headed in the future, the COT report does allow the small investors a way to see what larger traders are doing and to possibly position themselves accordingly. For example, if there is a large managed money short interest in gold, that is often an indicator that a rally may be coming because the market is overly pessimistic and saturated with shorts – so you may want to take a long position.
The big disadvantage to the COT report is that it is issued on Friday but only contains Tuesday’s data – so there is a three-day lag between the report and the actual positioning of traders. This is an eternity by short-term investing standards, and by the time the new report is issued it has already missed a large amount of trading activity. Is the Yen rally overdone?
The Japanese yen has been very strong as indicated in the above chart which takes away the carry trade and goes opposite to the trend of equity prices.
The top tier Bank stocks: Wells Fargo JP Morgan and Bank of America all had a deleterious two weeks. Wells Fargo ( WFC: $ 46.60 ) – $ 1.74 or 3.6% last week after falling a similar 3.7% the previous week has not yet found a bottom. JPMorgan Chase ( JPM: $ 62.28 ) fell 2.4% last week also down a second week. Bank of America ( BAC: $ 13.40 ) – $ 0.43 or -3.1% had another down week after falling $ 0.59 or 4.1% the previous week. The Select Sector Financial ETF, the S&P Spider, ( XLF: $ 22.61 ) seems to have made a top May 31st at 23.93 and is now cascading lower breaking all chart points including its 200 day moving average at about 23 to close at 22.61. Plain and simple, the banks are signalling trouble ahead with current Fed policy.
Uncertainty about the Brexit vote is unsettling but there is no precedent for how our markets will react. Europe accounts for about 9% of sales from listed S&P 500 companies from stable businesses food, beverages and drugs. Selling of affected currencies could cause buying of dollars. However, the greenback has been among the weakest currencies even against the Russian Ruble which is up 9.92% against the dollar this year. The Euro itself is up 3.83%; The Canadian Dollar is up 6.8%; The Singapore Dollar is up 4.91% and the Japanese Yen has gained a huge 13.4%. Only the British Pound is lower against the greenback, off about 2.56% this year. Germany’s 10-yr yield ended the week at 0.018% after making a record low at -0.038%.
St Louis Fed President and voting member James Bullard made headlines, saying that he believes only one rate hike will be warranted through 2018. Mr Bullard had voiced support for four rate hikes as recently as January. The Fed Funds futures market prices the liklihood of a rate hike in December at 45%. The probability of a hike in July receded to 10.0% from 23% at the end of last week.
Market Strategies Economic Data
Retail sales increased 0.5% in May (Briefing.com consensus +0.3%) while retail sales excluding autos increased 0.4% (Briefing.com consensus +0.4%). Notably, there were no revisions to the prior month, which saw the strongest monthly sales gain since Mach 2015.
Core retail sales, which exclude auto, gasoline station, building equipment, and food services sales, were up 0.4% after a 1.0% increase in April. The strongest increases as might be expected were made by gasoline stations ( + 2.1% ) Internet type Non-store Retailers ( + 1.3% ) and Sporting Goods, Hobby, Book and Music stores ( + 1.3 % )The main pockets of weakness in May were sales at building material, garden equipment and supplies dealers (-1.8%), miscellaneous store retailers (-1.2%), and department stores (-0.9%).
| Category | MAY | APR | MAR | FEB | JAN |
| Retail Sales | 0.5% | 1.3% | -0.3% | 0.3% | -0.5% |
| Excluding Autos | 0.4% | 0.8% | 0.4% | 0.2% | -0.4% |
| Durable goods | |||||
| Building Materials | -1.8% | -2.0% | -0.3% | 0.5% | -0.3% |
| Autos/parts | 0.5% | 3.1% | -3.1% | 0.7% | -1.1% |
| Furniture | -0.1% | 0.3% | -0.1% | 0.4% | -0.5% |
| Nondurable goods | |||||
| General Merchandise | -0.3% | 0.2% | 0.4% | -0.3% | -0.8% |
| Food | 0.5% | 1.2% | -0.5% | 0.1% | 0.5% |
| Gasoline stations | 2.1% | 2.5% | 3.7% | -5.2% | -3.1% |
| Clothing | 0.8% | 0.4% | -1.0% | 0.6% | 0.0% |
| e*retailing/non-store | 1.3% | 2.5% | 0.7% | 1.1% | 1.4% |
After showing a spike in April, the Industrial Production report for May disappointed, declining 0.4% while the Briefing.com consensus expected a downtick of 0.1%.
Capacity Utilization was also very short of estimates, hitting 74.9% (Briefing.com consensus 75.2%)
The consensus expected to a see a downturn related largely to an expected pullback in utilities production (after a big gain last month) and continued weakness in mining. Part of that turned out to be true as utilities production declined 1.0%; however, mining activity ticked up 0.2%.
The mining index was the only one to register an uptick while all other categories declined. Final products declined 0.7%, nonindustrial supplies fell 0.3%, construction dropped 0.3%, and materials ticked down 0.2%.
Total industry capacity was up 0.8% year-over-year, but declined to 74.9% from 75.3% in April. Manufacturing capacity decreased 40 basis points to 75.2% and utilities capacity fell 90 basis points to 78.4%. Mining capacity increased 40 basis points to 73.1%.
| Category | MAY | APR | MAR | FEB | JAN |
| Industrial Production | |||||
| Total Index | -0.4% | 0.6% | -1.0% | -0.2% | 0.5% |
| Manufacturing | -0.4% | 0.2% | -0.4% | 0.0% | 0.4% |
| Utilities | -1.0% | 6.1% | -3.9% | -1.0% | 3.7% |
| Mining | 0.2% | -2.6% | -2.4% | -0.6% | -1.8% |
| Capacity Utilization | |||||
| Total Industry | 74.9% | 75.3% | 74.8% | 75.6% | 75.8% |
| Manufacturing | 74.8% | 75.2% | 75.1% | 75.4% | 75.5% |
Market Strategies Cycles
June’s Triple Witching option expiration week (or Quadruple if you prefer) has a history of choppy performance. The week has historically been rather volatile with frequent moves in excess of one-percent in both directions. This volatility has been evident this week. Add in a Fed meeting and the upcoming Brexit vote and it becomes clear why the market appears to be on edge.
Wednesday’s Fed announcement drew attention not for its lack of action, but because of the reduced growth forecasts that accompanied it and an apparent disconnect over inflation expectations. Reduced growth is not that large of a surprise especially considering the Fed’s recent track record of being overly optimistic. What is somewhat concerning is the Fed maybe missing the big picture when looking at inflation. It would not be the first time for this either. Longer-term expectations do not appear that stable.
In the short-term, energy and housing have been giving CPI and PCE (Fed’s preferred metric) a boost, but longer-term expectations are falling. Since peaking in April 2011, the University of Michigan’s Inflation Expectations survey has been in a steady down trend. It was at 4.6% then and the most recent reading was 2.4%. But, this is just a survey and can be dismissed. However, what cannot be ignored are the negative 10-year bond yields in Japan, Switzerland and now Germany. There has also been a meaningful drop in U.S. yields. Undoubtedly, some of this distortion is the result of central bank policy and a flight to safety, but it also seems to be a clear signal that longer-term inflation expectations are also moving lower.
There is plenty of research that concludes the lack of inflation, or worse deflation, is simply not good. One only needs to look up the Great Depression for further detail. The real issue is the nearly obvious fact that low interest rates and quantitative easing did not/does not work all that well. It may have staved off the Financial Crisis and kept economies from falling off a cliff, but it has failed to spark sustainable growth. Growth has stalled, corporate earnings are flat-lining and real wages are shrinking which is not the best recipe for continued stock market gains. Sideways to lower is more likely.
Next week’s Brexit vote is important for more than just the citizens and residents of Great Britain. Should they vote to leave the European Union, it is a vote to undue decades worth of work and cooperation and a blow to globalization. Will Great Britain be better off or worse should they leave? Only time will tell. If they are worse off, it will likely be business as usual for the rest of the world’s economies. However, if they are better off, it could mean a significant change in the global economy as other countries might follow suit and take similar isolationist moves.
The Stock Trader’s Almanac issued Sell signals for all indexes.The markets are likely oversold. They would be short the DJIA, S&P 500 and NASDAQ. Exposure to equities has been trimmed, and depending on personal risk tolerance, you are in cash, bonds and a handful of bearish positions or some combination thereof. The Stock and ETF Portfolios are positioned with a combination a few select longs and a number of defensive positions.
In all likelihood the worst case scenarios presented elsewhere will not unfold. End-of-Q2 portfolio window dressing and concerns over the Brexit vote will probably be the catalyst that incentivizes direction. The DJIA has registered a loss in 24 of the last 27 weeks including the past week after June option expiration. Another weekly loss and the then known result of Brexit will likely have taken investor sentiment sufficiently bearish to setup a tradable rally into the first half of July just as the Presidential conventions kick off.
A fickle Fed, mixed economic data and a volatile political and geopolitical arena are likely to keep the market at bay for the remainder of the year. We expect the averages to fall short of new highs and trade in a sideways to choppy fashion visiting the lows of last August or earlier this year. A year-end rally is likely to be contingent upon who wins the White House.
History suggests that a win by an untested, unorthodox and unfamiliar candidate as Mr. Trump might be a drag on the market as uncertainty continues to permeate the Street. Contrary to popular opinion and regardless of your political beliefs, the market is likely to do better on a win by Mrs. Clinton because of less uncertainty – a continuation of much of the current administration’s policies.
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Undervalued Small Cap Stocks
Lower Priced stocks that look to be a buy:
Repro-Med Systems,Inc ( OTCQX: REPR 0.36 )*
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 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: $ 5.45 )
The stock moved from approximately $5 a share to approximately $6.50 from May 1 to early June. If you look at the chart pattern of the stock the big volume came in on May 9 which coincided with the Louis Navallier recommendation that I sent to you on that date. 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.
During the same time frame the Russell Index probably started to see some front running by Index funds or ETF’s to position themselves into Enzo’s stock as they looked to be included in the Index. These funds mirror the Russell Index. The Russell is a two edged sword. The positive edge is that for Enzo it probably means 2-3 million shares will be bought. Enzo was included in the 2000 and 3000 Russell Index on June 10.
Now the negative edge of that sword. The Index funds , in order to try to out- perform the Russell will hedge their long positions by shorting the stock against their long position to go neutral if they think the market shows weakness or if the fundamentals of the company change. If you remember when Enzo was removed from the Index a couple of years ago the short position was 4 million plus shares and the day Enzo was removed the shorts delivered their long position against the short to flatten the position. The short position on that day dropped to 1 million shares. Enzo had a conference call on their third quarter release last week and I didn’t see any change in the fundamentals. However those individual investors that bought on the Navellier recommendation don’t know the Company and saw that they reported a loss for the quarter (even though they beat estimates) and may have taken profits.
The market in general was down 5 straight days and the index’s that got long the stock may have shorted to hedge their position. That can be confirmed on the first two week short report due out next week. The short position at the end of May was 937,000 shares down from the mid- month short of 1,010,700.The stock has come down some 15% from its high which is not a big deal. To me it is just a technical move.
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.
Gold Mining USA OTC: GMUI ( 0.03 )
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. 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.
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. 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
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.
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.
iSIGN Media Solutions Inc ( ISDSF: $ 0.107 )
is public company trading on the Toronto Stock Exchange Venture market under the symbol ISD (TSX-V: ISD), and in the United States on the OTC under the symbol of ISDSF. The web site is www.isignmedia.com
iSIGN is a Software as a Service (“SaaS”) company whose US patented software (patent # 8,781,887 B2, received in July 2014) is a unique ‘push and pull’ technology that utilizes Bluetooth and Wi-Fi to ‘push’ messages in any language to mobile devices within a 300 ft (100 meter) radius of our technology, while gathering valuable information from the interaction of our technology with mobile devices within range of our hardware. Recently one of the largest insurance companies in the world categorized the smart antenna as a security device and has given an amusement park a 15-20% discount on their insurance premiums. Please go to “ priority posts” to view recent events.
Technology Overview
The patented and proprietary technology does not involve apps and related downloads in order to receive and view messages and, as messages are delivered by Bluetooth and Wi-Fi, is capable of interacting with all cell phones including I Phones and androids. The second hardware unit, the Smart Player, contains all the features of the Smart Antenna, while adding the ability to manage content on digital screens at the same time.
Recent Developments
In late October 2015 iSIGN signed a Licensing/Original Equipment Manufacturer Agreement with Rich Multimedia Technologies (“RMT”) to integrate iSIGN’s Smart Antenna into RMT’s Tele-Digital Store Front Kiosk (essentially a digital signage kiosk). iSIGN will receive a licensing fee based on built units and will also receive a data management fee once the Kiosk is activated. The total fee per Kiosk is $3 US per day. RMT is immediately constructing 5,000 Kiosks for Mexico (airport, transit system and government offices) and has a roll-out plan for a further 3,600 Kiosks into various international airports in the US and Canada by the end of calendar 2016. Based upon a $3 US per day per kiosk fee, the revenue opportunity from this one installation is $9.417 million annually, once all 8,600 Kiosks are build and activated. The profit margins are 60-70 percent of revenues. Rich Multi Media is presently in five airports in the United States and is presently integrating approximately 600 Isign’s Smart Antenna in all there kiosks.
Fundamental Analysis Stocks To Buy with Stops
Using fundamentals the following are stocks to buy and they have done well.
Kroger ( KR: $ 35.18 ) was bought at $ 35.71.
We bought the HOG at $ 45. Don’t like the pattern. If you are long, consider liquidating.
We bought the Sunoco at $ 29.50. Sell July $ 30 Calls against the position.
Buy Enzo Biochem with a 40 cent risk.
The Russell rebalancing could be interesting for ENZ.
The HDGE should now be bought.. The HDGE goes Up when the market goes Down. It is a good hedge against long positions.
We are still interested in buying the Flushing Financial at our theoretical buy limit.
The table is hypothetical. We have taken numerous profits as indicated on the table below.
| Name | Business Description | PE | P/S | MV mln | Price | Buy or Sell Limit | Stop Loss
Or offset |
|
| DY | Dycom | Materials. Construction Cell Towers internet Infrastructure | 25 | 1.1 | 2.7B | 86.89 | 85.50 | 82x |
| BA | Boeing | Aerospace, commercial jetliners, military systems | 14 | 0.85 | 81B | 129.82 | Sell Short
132.95 06/09
|
134.40x
|
| KR | Kroger | Processor and Retailer Foods | 15 | 0.31 | 34B | 35.18 | 35.71
6/14/16 |
Stop not entered |
| HL | Hecla Mining | Basic Materials | 44 | 3.61 | 1.7B | 4.50 | 3.95 | 4.27x |
| FFIC | Flushing Financial | Bank Holding company Savings and loans | 13 | 3,5 | 592Mln | 19.92 | 19.10 | Buy on a dip |
| SUN | Sunoco | Oil and Gas Refining and marketing | 10 | 0.2 | 2.1B | 30.06 | 29.50 | Took profit on short Calls |
| AA | Alcoa | Aluminum Processing and Technology | N/A | 0.4 | 9.5B | 9.58 | 7.05 | Sell
|
| SBH | Sally Beauty Holdings | Specialty Retailer and distributor beauty supplies | 16 | 1 | 4B | 28.82 | 27.30 | 30x stopped out at 30 |
| HOG | Harley Davidson | Motorcycles and related products | 11 | 1.32 | 8B | 45.13 | 45 bought June 10th
|
Sold at 51.66 on 4/4 new stop at 43 |
| CHD | Church & Dwight | Consumer Products Sodium bicarbonate Arm and Hammer | 25 | 3 | 10.6B | 98.57 | 79.80
01/26/16 |
Sold at 94.20 |
| T | AT&T | Communications | 36 | 1.54 | 211.7B | 40.73 | 34.10 | 37.78x |
| VA | Virgin Air | Regional Airlines | 7.2 | 0.9 | 1.5B | 56.11 | 30.30
Bought |
Merging with Alaska |
| ENZ | Enzo Biochem | Life Sciences | NA | 1.35 | 134M | 5.45 | 6.05
Originally bought at $ 2.78 8/24/15 |
5.18x |
| BAC | Bank of America | Commercial Bank | 10 | 2.02 | 165.3B | 13.40 | 11.86 | 13.80x stopped out 6/10 |
| HDGE | Advisor Shares | Ranger Bear ETF | 10.59 | Bought at 10.40 | 10.27x
Stop below the 13 D M.A. |
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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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