Now that we’re more than a fortnight into 2017, it’s time to see if we can discern some direction in the market. For example, there has been tremendous strength in the restaurant space, particularly casual dining and fast-foods plays, Jim Cramer said during his Mad Money program’s “Off the Charts” segment.
To get an accurate picture of which companies in this space have strong money flow, good volume and robust price trends, Cramer turned to Bob Lang, founder ofExplosiveOptions.net and the technician in the three-man, all-star team behindTheStreet.com’s Trifecta Stocks newsletter.
Lang’s analysis of the fast-food sector uncovers four strong companies. Leading the pack is Popeyes Louisiana Kitchen (PLKI) . According to Lang, Popeyes has perhaps the strongest chart in the entire fast-food segment.
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If you’re going to keep riding the Trump rally, you’d better have conviction, Jim Cramer told his Mad Money viewers Tuesday, as the crosscurrents in the market are getting increasingly disruptive.
The stock market hangs on every word and tweet of president-elect Donald Trump, and that means when Trump says that the proposed cross-border tax Congress is working on is “too complicated,” stocks like Constellation Brands (STZ) and apparel maker PVH (PVH) can rally, as they did today — up 2.9% and 6% respectively.
Cramer noted that even Apple (AAPL) , an Action Alerts PLUS holding, was able to e
ek out a rally on an otherwise down day.
But then there are the banks which might do a lot less lending in a world where Trump and Congress don’t agree. That notion sent shares of Morgan Stanley (MS) lower by 3.7%.
Not all is doom and gloom however, as we are just days away from having the most pro-fossil-fuel president ever. That’s why Cramer advised staying long oil and gas stocks. He remained bullish on UnitedHealth
Qualcomm (QCOM) is being sued by the Federal Trade Commission for allegedly unfair practices in licensing its technology.
The company’s semiconductor chips serve as the backbone for many of the smartphones produced by tech giants like Apple (AAPL) and Samsung (SSNLF) .The FTC claims that Qualcomm has used its dominance to “impose onerous and anticompetitive” supply and licensing terms on smartphone manufacturers and to “weaken competitors,” officials said in a statement. The suit referred specifically to Qualcomm’s actions on a key component of smartphones and other electronic devices known as baseband processors.
The news sent Qualcomm shares sharply lower by 4% to $64.19 on Tuesday on fears of damage to its lucrative business model. The stock is down 1.6% year to date, but up 39% over the past year.
“By excluding competitors, Qualcomm impedes innovation that would offer significant consumer benefits, including those that foster the increased interconnectivity of consumer products, vehicles, buildings and other items commonly referred to as the Internet of Things,” the FTC continued in a statement.
Licensing fees also drive a large share
In our recent coverage of EOG Resources (EOG) , we concluded that “Prices are higher today, but the overall position of the indicators suggests that a test of the $100 to $98 area could happen before a more-sustained uptrend gets under way.”
I am not insulted, but EOG decided to ignore my forecast, and has crept higher this month. Let’s take a fresh look at the charts and indicators.
In this updated daily chart of EOG, below, we see prices turned higher in January. But take notice at the pace of volume in January — much slower than in December. Despite this slower pace of turnover, the On-Balance-Volume (OBV) line continued to move higher, telling us that buyers of EOG are being more aggressive. The trend-following Moving Average Convergence Divergence (MACD) is above the zero line, which is positive, and it could cross to a fresh buy signal.
In this weekly chart of EOG, below, we can see prices are above the rising, 40-week moving average line. The OBV line is positive and the MACD oscillator remains positive.
Bottom line: EOG now has a greater probability of making a new high and subsequent strength
Cimarex Energy (XEC) has been trending sideways to higher since August. With our technical indicators in a bullish alignment on the daily and weekly charts it may only be a matter of time before prices break their 2014 highs. Let’s check the charts.
In this one-year daily chart of XEC, below, we can see prices above the rising 50-day simple moving average line. Prices are also above the rising 200-day moving average line. The On-Balance-Volume (OBV) line has been steady in the past two months after a long period of increasing.
The Moving Average Convergence Divergence (MACD) oscillator, above, has been above the zero line since early December. Considering the price action with the indicators gives me the impression that we are seeing a high level consolidation.
In this three-year weekly chart of XEC, above, we can see that prices are above the rising 40-week moving average line. The weekly OBV line is positive and confirms the price advance. The weekly MACD oscillator has been above the zero line since May and is poised for a fresh buy signal.
This long-term Point and Figure chart of XEC, above, shows a very wide base pattern
Brexit seems to be getting much-needed closure this morning. When markets can move away from uncertainty, often regardless of the news, there is relief. The relief here is coming in the currency markets. Both the pound and the euro are strengthening this morning. I’m a bit more interested in the euro here, as it has a broader impact and reach.
Examining the CurrencyShares Euro Trust (FXE) , the short-term push here is attractive. Even though we’re not getting much from the Average Directional Movement Index (ADX), the short-term trend is strong and the longer-term trend is turning higher after spending several painful months on the drop to par. That’s playing out to be the hard-stop area for euro longs. But this bounce has potential to play out a few percentage points higher against a 1% stop.
My preference would be to play it smaller on the long side with wider stops. The alternative approach is to watch for a pullback into the $103.50 area, and buy a bounce from those levels.
Strength in the euro isn’t a straight one for one in an ETF like the iShares MSCI EAFE(EFA) . Correlations have jumped from very strong
Shares of Check Point Software (CHKP) are up 18% in the last quarter and 7.4% this month. Will investors get locked out of more gains? Check Point Software reports after the close on Thursday, Jan. 19.
Analysts are expecting another solid quarter. The stock had been trapped in a trading range since early 2015, but really broke out after the company reported a strong third quarter on Oct. 31.
Third-quarter earnings of $1.13 per share were $0.05 better than the consensus estimate. Revenue rose 5.9% to $427.6 million.
About 70% of shipments were for new products. Software blade sales were up 24%. Recurring subscriptions, which made up 23% of revenue, were up 370 basis points to $99 million. Operating income of $231 million was 54% of revenue, down 250 basis points due to higher spending on new products.
During the quarter, the Sandblast Zero Day Threat prevention product was the best selling and reached $20 million in billings.
Management guided fourth-quarter earnings to a range between $1.20 and $1.28. Revenue is expected to be between $460 million and $447.23 million. The consensus estimate is $1.25 for earnings and $477.9 million for revenue.
There’s plenty that could wrong for investors while Donald Trump is president of the U.S.
That’s why experts who participated in TheStreet’s panel discussion, “How Investors Can Win,” held recently in New York, said investors ought to take steps now to protect their portfolios against possible Trump-era risks.
Shorten Bond Duration
What are those risks? Well two such risks, according to Larry Siegel, the Gary P. Brinson director of research at the CFA Institute Research Foundation and one of three panelists, are higher interest rates (and falling bond prices) and higher inflation.
To be sure, that’s happening already. The yield on the U.S. 10-year Treasury bond has risen from 1.367% in July to 2.639% this week, and that’s a cause for concern among investors who might be holding long-term bonds. Plus, the government announced this week that the annual rate of inflation in the U.S., not including food and gasoline, is now 2.1%. And that’s up from 0.7% in 2015 and 0.8% in 2014.
“That trend could keep going,” Siegel said during the panel discussion. “So, I would say shorten your bond duration. I would want to hold less in loan bonds and
Baidu’s (BIDU) new chief operating officer may hold the key to unlocking the Chinese internet giant’s potential in the artificial intelligence market.
Qi Lu will now oversee Baidu’s products, technology, sales and marketing. He’ll also head Baidu’s artificial intelligence efforts, which the company has continued to invest in amid slowing revenue from its core search engine business.
Lu was previously at Microsoft (MSFT) , where he served as global executive vice president and was in charge of its Office, Bing and Skype products. There, he also helped lead Microsoft’s push into new areas like artificial intelligence and chatbots. Prior to Microsoft, Lu was an executive vice president at Yahoo (YHOO) from 2007 to 2009.
Analysts have said that search companies like Baidu could be shaped enormously by developments in artificial intelligence, particularly as technologies like speech recognition become more advanced.
“To achieve our goals, especially in artificial intelligence, which is a key strategic focus for the next decade, we will need to continue attracting the best global talent,” Baidu CEO Robin Li said in a statement. “With Dr. Lu on board, we are confident that our strategy will be executed smoothly and Baidu will become a world-class technology company
The president-elect uses Twitter to disintermediate the press and it is incredibly effective.
You know when else it is effective? When you follow my feed and you see the vitriol directed, in large part, at me about stocks like Advanced Micro Devices (AMD) andBank of America (BAC) , to name two that got shot down today. I am sure when they hammer the airlines, I will take a blast on Twitter, too.
Normally, I do not care that much anymore. So many things have been said and written about me over the years that it really doesn’t matter anymore. I block a lot of people and the days of fighting with anyone are pretty much over because it just encourages others to fight and, more important, it truly detracts from all the incredibly nice and helpful folks who tweet.
But, unfortunately at moments like this, I pay “collective” attention, say, to all the people who tweet that I have been pushing AMD to help people get out of it. Who are these “people”? I don’t talk to “people” about what I am “pushing.” And I have liked AMD for ages, still do, and it’s gone
Even as Meg Whitman breaks apart Hewlett Packard Enterprise (HPE) , the Silicon Valley enterprise technology group announced the $650 million purchase of IT infrastructure outfit SimpliVity after the market close on Tuesday.
SimpliVity develops hyperconverged infrastructure, or an evolving IT segment that provide the economics of cloud computing with reliability and other benefits of operating from on-premises infrastructure.
UBS expects the hyperconverged market to total about $2.5 billion in 2017. SimpliVity is the second-largest pure hyperconverged IT company next to Nutanix(NTNX) , which went public in September 2016 and has a nearly $4.3 billion market cap, UBS analyst Steven Milunovich wrote earlier in January. Large players like Dell EMC and Cisco Systems (CSCO) have entered the market as well.
SimpliVity has backing from Accel Partners, Charles River Ventures, DFJ Growth, Kleiner Perkins Caufield & Byers, Meritech Capital Partners and Waypoint Capital. A March 2015 fundraising put SimpliVity’s valuation at more than $1 billion.
Since breaking Hewlett Packard Enterprise from HP (HPQ) in late 2015, Whitman has continued to refine the company’s holdings.
In May 2016, Hewlett Packard Enterprise said it would spin out its enterprise services unit and merge the business with
Netflix (NFLX) is focused on international subscribers, but investors are obsessed with a possible buyout.
When the world’s premiere subscription-based video distribution platform posts its fourth quarter earnings on Wednesday after the market close, it’s expected that Netflix will have added 3.7 million net international subscribers and 1.4 million in the U.S., according to the average of 42 Wall Street analysts as compiled by FactSet. Forecasts for the current quarter are expected to be a bit softer: 2.9 international net subscriber adds and 1.5 million domestically.
If Netflix surpasses those estimates and first quarter guidance, investors are likely to be thrilled. At a time when all content companies are scrambling to amass more than two million subscribers to their streaming platforms, Netflix continues to dominate.
At the end of the September, the Los Gatos, Calif. streaming service had 86.7 million subscribers worldwide.
As for the other major metrics: Netflix is expected to post net income of $91 million on $2.47 billion in sales. Earnings per share adjusted for some costs is forecast at 20 cents, according to FactSet.
Nonetheless, the elephant in the room remains the possibility of an industry-changing acquisition. The most
Ringling Brothers and Barnum & Bailey Circus hoped to appease animal rights activists when it stopped using elephants in its shows, but without elephants, the circus wasn’t able to fill enough seats.
Family-owned Feld Entertainment, which said it’s the world’s largest producer of live family entertainment, announced in a statement that the decision last year to phase out elephants in its productions created “a decline in ticket sales greater than could have been anticipated.” The elephants performed their last show on May 1, ahead of their expected 2018 retirement.
Ringling Brothers had a long history with elephants. In 1881, P.T. Barnum purchased the famous Jumbo, a male African bush elephant, for $10,000, now about $250,000.
The last Ringling Brothers and Barnum & Bailey shows will be held in Providence, R.I., on May 7, followed by a May 21 performance in Uniondale, N.Y. The company’s current roster of shows also includes Marvel Universe LIVE! and Disney on Ice.
The demise of Ringling Brothers is a major coup for animal rights groups such as People for the Ethical Treatment of Animals (PETA), which on Saturday touted 36 years of activism which “reduced attendance to the point of
In the “Off The Charts” segment, Cramer checked in with colleague Bob Lang over the charts of several restaurant stocks that could be poised to gain in 2017.
Lang felt the daily chart of Popeyes Louisiana Kitchen (PLKI) was among the strongest in the fast-food group, with shares soaring after the election, only to consolidate afterward. The Chaikin Money Flow (CMF) is strong and the MACD momentum indicator just signaled a bullish crossover. If shares can breach their ceiling at $63, Lang felt $75 a share could be possible.
Like Popeyes, shares of Cheesecake Factory (CAKE) have also been climbing since November, pulling back recently to their 50-day moving average. Lang noted that the CMF is still negative, signaling more room to run.
Lang was also bullish on Jack in the Box (JACK) , which became overbought in December but has since pulled back. With a solid chart, Lang would be a buyer if shares break through their ceiling at $112.
Finally, Lang examined Panera Bread (PNRA) , noting the stock was at an inflection point, but with more upside likely. Shares have a tough ceiling at $215 a share, but with a MACD
Though the smartphone market’s growth has slowed to a crawl, the same certainly can’t be said for the app stores running on top of them. The industry they’ve spawned continues to swell in size, as consumers keep increasing their app usage and become more comfortable paying for downloads, in-app purchases and subscriptions.
And for a few different reasons, Apple (AAPL) is benefiting much more from this trend than Alphabet/Google (GOOGL) .
In its 2016 Retrospective report, App Annie, a top provider of app download and usage data, estimated that total revenue from the iOS App Store and Google Play rose 40% in 2016, a faster clip than was seen in 2015. Publisher payouts topped $35 billion; with Apple and Google typically getting a 30% cut on paid downloads and in-app purchases, this implies total revenue of about $50 billion. The fact Apple and Google now often get a 15% cut on in-app subscriptions makes it tough to come up with a precise number.
Though far more Android phones were sold last year than iPhones — in November, research firm IDC estimated the ratio would be close to 6-to-1 — App Annie believes the App Store
Here’s the thing about federal money: it all has to come from somewhere. While Washington’s role as the spender of last resort is a critical piece of America’s federalist system, for it to send money out to states in the form of aid, grants and other spending, Congress actually has to have that money in the bank. There are three ways of getting it.
The first is simply to print more. As a sovereign nation in control of its own currency, America can at any time make enough dollars to meet current needs. (This is what differentiates it from a European Union country and one of the many reasons why, structurally, America can never become Greece.)
This isn’t a bad thing. As the economy expands, the money supply needs to grow with it, or else the ratio of dollars to goods and services will shrink, potentially leading to deflation and the host of macroeconomic ills that come with it. It is an irony of language that the “stronger” the dollar, the weaker the economy can get.
Of course at the same time printing money has to be done extremely carefully or else the government risks
Apple (AAPL) Music is trying to create “an entire cultural, pop culture experience that happens to include audio and video,” the head of the division Jimmy Iovine said over the weekend at the Television Critics Association press tour.
His comments came after he was asked about Apple’s much-talked about push into original content for television and movies, as reported by the Wall Street Journalearlier this month. While he didn’t give specifics, Iovine did seem to confirm theJournal’s report.
“If South Park walks into my office, I am not going to say you’re not musicians, you know?” Iovine said during the press tour. “We’re going to do whatever hits popular culture smack on the nose. We’re going to try,” he added.
Apple seems to have lacked a “coherent, cohesive strategy around video, TV and movies,” noted CNBC’s Jon Fortt on Tuesday morning’s “Squawk on the Street.”
“I mean they’re rumored to do something here, something there,” but there doesn’t seem to be a real plan for who’s in charge, he said.
In addition, people are concerned about Apple’s iPhone sales because a number of customers are waiting to upgrade their iPhone until the expected
Originally published on TheStreet’s Realmoney on Dec. 28 — updated with David Einhorn comments
Wall Street titan David Einhorn is now keen on Apple’s (AAPL) stock, and you should be too.
“Apple stands to benefit from repatriation of foreign cash and tax reform,” Einhorn wrote in his annual investor letter Tuesday
Here is some more depth behind Einhorn’s newfound bullishness.
CSX (CSX) derailed hopes for an enthusiastic start to railroad earnings season late Tuesday, reporting fourth quarter results that came in just shy of what was seen as a conservative consensus.
Jacksonville, Fla.-based CSX reported net earnings of $458 million, or 49 cents per share, compared to net earnings of $466 million, or 48 cents per share, a year prior. Analysts had expected CSX to earn 50 cents per share, according to FactSet, with some calling that consensus conservative after seeing strong December traffic numbers for the industry.
Shares of the trasportation company closed down 71 cents, or about 2%, to $38.09 Tuesday. Shares slid another 4% in after-hours trading to $36.52.
Canadian Pacific (CP) , Union Pacific (UNP) and Kansas City Southern (KSU)also report this week, while Norfolk Southern reports on Jan. 25. CSX was seen by the analyst community as most likely to beat what was viewed as conservative guidance, while Union Pacific will be closely watched as its volumes have trailed peers in recent quarters.
Many in the industry have already enjoyed a strong run up since the election, with CSX up 18% since early November and Union Pacific and Norfolk
A pall spread over the markets as the Trump rally came to a screeching halt on Tuesday, following uncertainty over which of the incoming president’s policies were concrete and which were just bluster.
The Dow Jones Industrial Average fell 0.3%, its fifth session in six in decline. Banks JPMorgan (JPM) and Goldman Sachs (GS) led the Dow’s losses on Tuesday in a pullback following Friday’s rally in financial stocks.
The S&P 500 was down 0.3%, and the Nasdaq slid 0.6%. The Volatility Index(VIX.X) increased 6.6%.
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President-elect Donald Trump will be inaugurated as the 45th President of the U.S. this Friday. His recent statements on trade policies and foreign relations only highlight the tenuous grasp anyone has on how the next 100 days will play out.
“The question surrounding the financial markets will be whether or not most of his campaign rhetoric regarding trade agreements will actually be implemented,” Peter Cardillo, chief market economist, wrote in a note.