(Mike Larson, editor of the Safe Money Report, is on assignment in Europe. Jon Markman, editor of the Tech Trend Trader, steps in to examine the latest trends in technology.)
Market Roundup
Big gains by some big tech names have brought the Nasdaq 100 index on the verge of its first multiyear closing high since July. It would be the first major U.S. index to do so, with the others all lagging their own highs by at least 1.5%.
The question for investors: What does that mean going forward for the broad market? The conventional wisdom would say it’s good for the Nasdaq 100 to lead, but very often these old bromides are not always true when scrutinized.
While the Nasdaq 100 is at a new high, the S&P 500 is roughly 2% below its high, the Dow Jones Industrial Average is 3% shy and the Russell 2000 is lagging by 9%. So what tends to happen next when the Nasdaq 100 hits a new three-year high, but the other three indexes are all at least 1% below their own highs?
Jason Goepfert at Sundial Capital has run the data, and discovered that returns for the broad market were shaky in the very short term, with twice as much of a chance of seeing a down day next than an up day. Returns improved quickly after that and by two weeks later the S&P 500 was twice as likely to show a positive return as negative one. Three months later, 18 out of 23 occurrences were positive, with 13 gains of more than 3% versus two losses of more than 3%.
The best performers in the next three months were the Nasdaq 100 and Russell 2000, both of which outperformed the S&P 500. The best of all was the Nasdaq 100, whose average returns handily beat every other index. Overall, Goepfert concludes that the Conventional Wisdom this time … is right on. Nasdaq leadership is a plus.
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| Can big-name Nasdaq stocks endure? |
The two charts above show that the elite of the Nasdaq 100 since 2012 have been the large Web-oriented stocks like the ones our new Internet of Things (IoT) portfolio in the Tech Trend Trader service focuses on, and those have been the power behind the recent outperformance as well. Facebook (FB) is not widely recognized as an IoT name, but it will turn out to be one of the biggest players.
That’s why I will continue to focus on technology for the profits of tomorrow, in the short term and also for the upcoming years.
Do you have the same faith in technology stocks as I do? Which ones do you favor? Have any of the big names run their course, soon to be replaced by new technology? I’d love to get your views. Click here to share them with your fellow readers.
Best wishes,
Jon Markman
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Many of the comments rolling in referred to the GOP debate, with many readers agreeing that the moderators were off-base with their questions.
Reader Fred 151 said: “Agreed. They should refuse to answer these inane questions in the future and talk about whatever they want.”
Reader Robert said: “The debates are only money makers for the media and television networks, and the moderators are the biggest jokers of the century. Yes, the American people have finally woken up and now realize just what a scam they all are thanks to the likes of The Donald. Jeb Bush needs to pick up his marbles and go home. He should have taken his mother’s advice which was, America don’t need another Bush! Take Marco with you when you leave and that recent fiasco in the House of Representatives with the New Speaker is another total joke.”
Reader Raymond added: “The commentators of CNBC asking the questions of the Republicans vying for office, has to be one of the ALL-TIME worst series of questions that I have ever witnessed.”
Join the conversation on the debate, the Internet of Things or any other issue by clicking here.
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The oil-price slump has hit Chevron Corp. (CVX), well at least it hit thousands of Chevron workers. While the company reported $2.04 billion in third-quarter profits, the oil giant also announced that it was laying off about 7,000 workers (11% of the workforce) and slashing capital expenditure because of the slump in energy prices. The quarterly profits actually did take a big hit from lower energy prices, although they beat Wall Street expectations. Profit for the quarter was 64% from the year-ago period, when the nation’s second-largest oil company (behind Exxon Mobil) had a profit of $5.6 billion. Revenue tumbled 37% to $34.32 billion. Chevron said its average price for a barrel of crude oil and natural gas liquids plummeted 51.7% from $87 a year ago to $42.
The back and forth on a potential Fed rate hike went back again today, with data showing that U.S. consumer spending in September posted its smallest gain in eight months and personal income rose only marginally. “It will be difficult for the Fed to justify a rate hike at a time when income, consumption and inflation are trending lower, leaving a December rate hike less likely than prior to the data,” Jay Morelock, an economist at FTN Financial, told Reuters.
Another day, another merger to report. This one, if it goes through, would bring the maker of Viagra and Botox together. Pfizer Inc., (PFE) the No. 1 drugmaker in the U.S., and Botox maker Allergan PLC (AGN) said they were in friendly talks for a deal that would create a pharmaceutical giant. But it also raised concerns that a combined company could establish its base in Ireland to take advantage of that country’s lower tax rates, and that in turn sounded political alarm bells. Pfizer is based in New York, while Allergan is located in Dublin. The companies said no agreement has been reached and that talks are still ongoing.
President Obama plans to send dozens of special ops forces to northern Syria to advise fighters opposing ISIS forces, a reversal of earlier policies and a step he had hoped to avoid as he tried to keep the U.S. from getting more deeply involved in a Middle East war. The number of forces would be fewer than 50, an administration official said, according to Reuters. Obama has come under pressure to increase U.S. efforts to halt ISIS moves in Syria.
What about oil companies that are making billions of dollars cutting back on employees? Is it only natural that corporate chiefs should look to cut costs and earn even more for shareholders if that is possible? Is Pfizer looking to do a deal to move its tax home to Ireland? Should more be done to stop such “inversion” moves? Jump to the website with this link to join the conversation.
Best Wishes,
The Money and Markets team
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If Pfizer wants to move their tax home to Ireland, that should be it’s right in a free society. A government that uses it’s powers to prevent such things is a dictatorship, and I may be glad, as an American, that I probably don’t have too many years left in this life. I’m 87, for the curious, and not really in any hurry to go – just being realistic.
I am for a free society but there has to be rules we all agree on. The world is interconnected like never before and sometimes we need to protect ourselves from others who don’t respect our values and would harm us while helping themselves.
Yes, there is a need for rules, but preventing a person or a company from moving their locus, perhaps, for a company, after a vote of stockholders, is not a reasonable rule. It amounts to a confiscation of property, without compensation, if an entity is forbidden to move in order to escape high taxes in its current location. That, I submit, is dictatorial, and dictatorial practices have slowly, a bit here, a bit there, been slipped into our laws by the politicians we have elected. One day, when it is too late, we will wake up to what has and is happening. We will be slaves to the State. It happened in 1930s Germany, and look what that resulted in. Wake Up!
Well Stated – The Buyer has The VOTE, Americans need to be informed of Corporate Initiatives to side step Safety, Pollution and Infrastructure Taxes.
Chuck, you’ve got things purty dam straight. Thanks for your insight and congrats on the 87 yrs of good long life.
The Vote is The Buyer. Relocation indicates direct opposition to Consumer Mandates in Workplace Controls for Pollution, Safety and Infrastructure Taxes. Many Countries, most significantly CHINA, ignore Workplace Safety, Pollution, Competitive Bargaining that are Illegal in The USA. Corporations choosing to EXPLOIT these Countries for Profits require Consumer Transparency that the BUYER has THE LAST VOTE. Thankfully Social Media allows this Today!
Fifty or less “boots on the ground” is just a beginning. What are the odds it won’t just be the beginning? Like it or not, those troops will effectively be supporting Assad – on the same side as the Russian efforts. If we don’t become a member of their command structure, we will inevitably come into conflict with them and their Syrian allies. That could happen anyway, since everybody seems to be fighting everybody else in that region. Obama just wants to join the party, I guess.
As an aside, I read that Jonathan Johnson, CEO of Overstock.com, announced at a convention that his company has ceased to trust Wall Street, and has acquired some $10,000,000, in small gold and silver coins, plus a 3 month supply of food, so it can feed its employees and pay them during the crisis they see coming. An extreme view of the future, perhaps, but at least they are preparing – maybe the only company to do so. I hope they can house those employees and their families also, if such a need develops. And defend them. too.
Chick. Bogbox Store has done the same thing. These CEO’s are seeing or hearing something which is taking them to the next level. Cover thyself!
We had a preview of this kind of thing when Hurricane Katrina hit New Orleans. Law and order broke down completely. There was some sporadic looting and general mayhem but oddly enough the primary reaction was paralysis. The general population is so conditioned towards dependance they refused to believe evacuation was necessary and then just waited for someone to save them. Jim
In N.O., help did come, before civility broke down, but if there had been no help for a week or more, and people began to starve…
I keep listing to the News and not once has any TV station CNN FOX Etc. talk about a situation that as a Vet has pissed me off. Has anyone heard of Gull Island Alaska? Or have they even heard of the Liberty Drill Rig? Hear is the true story behind it, back when Ronald Reagan was President, there was an oil embargo going on and OPEC lieing about the true number of barrels of oil it had, and oil was over priced. Americans had big gas guzzling cars, and gas stations had lines of cars trying to get gas! Ronald Reagan had his Star War program that was silly but, they made good use of it. They used it to find oil hear in the United States. It did and the amount of oil was huge! There was enough to pay off all the Nations debt 30 times over! Gas could cost .45cents. But Regan said No! We will leave it to the future generations. We’ll hear comes Obama, what does he do? He gave it away to BP but Gerorge Bush also along with Clinton made the secret deal. Hear we are in a true mess, sinking, and we the people are so dam stupid we let these secret deals happen during holidays and never hear about it till its too late. Go look up Gull Island most of the imformation has been removed to keep Americans knowing about it. Not one drop is coming hear, and not one dollar is being spent hear our leaders though made a huge pay day. Just like George Bush and Dick Chaney made millions off KBR and the people let that happen! When will people wake up?
See my answer to Steve T., above. The politicians slip things like this in on us, and we never hear about them from the 2nd estate, until WE are affected… or the Newsies are.
Four pools were discovered in the Gull Island area which are currently in production. They have produced about 400 million barrels and the reserve is estimated to be about 165 million. This legend began when ARCO kept their data secret for years. The first two wells were pretty good but the third was a dry hole. It was an attempt to extend the Prudhoe Bay Field but was written off as non commercial. The “Reverend” Williams started this fairy tale. The man knew nothing about Geology. The only money left to be made off of Gull Island is in the form of rare copies of William’s’ book on Amazon which go for over $1000 each. Jim
The Oil Embargo was in 1973. Reagan was elected in 1980. The Gull Island well was drilled in 1976 when Carter was President. There has always been a large number of responsible leaders that have believed it was in our best interest to use up,other peoples oil first and save ours for future generations. Policy has been plagued by the fact that every twenty years or so some “expert” declares we are running out of oil and panic sets in. Increasing numbers of geologist now believe that the “fossil theory” is wrong and that oil may be formed deep in the Earth’s crust and only migrates upward into porous zones. If this is true, the last thing we need to worry about is running out of oil. If you think about it 90 million bpd sure is a lot of fossils. If this was true wouldn’t there be someplace in the world where oil was being formed from organic matter now? No evidence can be found of that process. The only oil conspiracy lives in Saudi Arabia. Jim
What you get with zero rates is slow to negative growth.. Look at the revenue and profit of the S&P . Eight years and look. How things are trending
Look the Fed is boxed in. A new President and a Federal Reserve chairman will slowly unwind 8 years of theses problems..This is the only hope for the economy..
No, government should lower corporate taxes to compete with other nations such as Ireland. More regulations on companies that provide JOBS only push companies away from the USA.
RIIIIGHT!!
I think we make the mistake of viewing our tax code as a matter of fiscal and business considerations. It isn’t. Since the days of FDR and Huey Long the progressive thinkers that control both parties have advanced the notion that some individuals and corporation have too much and others don’t have enough. The way to correct this is to take money from the first group and give it to the second. This renders taxation a matter of social policy and not fiscal. As long as it’s fair it’s good. The progressive income tax and high corporate taxes are here to stay for that reason alone. Whether you think this is fair depends on which side of the equation you are on. This division explains the current political impasse in this country. Half pay and half receive. I’m not passing judgement on the system but pointing out it is what it is and it isn’t going to change except under extreme circumstances. Jim
If you rob Peter to pay Paul, you will have Paul’s support.
And robbing Paul to pay Peter? Guess what? Not many of us pay more than token respect for morality.
Keeping this system viable is also the reason they think they ought to have a monopoly on violence, i.e. Gun control. Jim.
With gun control, who has guns? Outlaws, for one – they don’t care about controls. The controller, for the other – to enforce the controls. Anyone with a gun, except the controller, is an outlaw, per say. The general public is at the mercy of the outlaws and the controller – that is to say, the government. How do you like being at the mercy of an armed IRS, for example?
From what I’m seeing though our having guns may not provide us with much in the way of protection. Virtually every government agency has well trained, heavily armed tactical units that would cut civilians down fifty to one. They all have automatic weapons and high tech devices which render us little more than helpless. So much for the Minute Man. Jim
Correct, Jim, but if we are willing to take the casualties, there are a lot more of us than there are of them, and if they kill all of us, who are they going to rule?
Retreat and continue the mission! I’ll never surrender. Jim
When to CEO’s and COO’s get paid bonuses based on profits they will do almost anything legal and semi-legal to keep profits up. They will slash payroll, slash R&D budgets, slash maintenance budgets. There isn’t one thought to the company’s future, where will it be even next year. It has become a take the money and run. Look at Fiorino and the mess at HP. Gutted the company took the money and left the company floundering. And the funny thing is some of the best run companies have CEO’s and COO’s who make way less in a decade what some of the worst run companies pay out in a year. There are those who justify high salaries saying they make all this money for the company, but at what price?
The Obama Misadministration is doing more harm than good in the fight with ISIL and the Syrian civil war. His policies will guarantee a lot more bloodshed and misery for the people of Syria and a big chunk of the rest of the middle east. He has ordered more military toys for the rebels in Syria which will only prolong the conflict. Syria needs a strong government and focus on the fight with the ISIL. All Ayatollah Obama is doing is setting up a three way conflict that will drag on for years, He should be doing everything he can to get everybody in Syria to a ceasefire and the conference table, which may mean he’ll have to get Putin and Iran to help. He will have to stop trying to interfere in everybody’s country’s.
Leave Assad where he is,with hindsight would you still have got rid of Gidaffi and Saddam,Hell,Iwish they would come back,and give us some peace.Remember the people do not go to war,its the damn politicions who lead them,while they sit back and load up there pension schemes,my view,in war,the only heroes are dead,the living just lucky.
If people believe they need to rebel against their government, that is the business of those people and their government. If another party horns in on the revolution, they are effectively making war on that government. Obama, like the Bushes, and other presidents before him, is, in effect, making an undeclared war against the Assad government, contrary to our Constitution, which gives that power only to Congress, except if we are attacked. But who, in Washington, gives a fig for that old fashioned thing? We had no constitutional right to attack Iraq, which hadn’t attacked us. We did have a constitutional right to attack the Taliban government in Afghanistan, which tacitly supported al Qaida, in its attacks on us.
Should this country be involved at all in the Middle East, except to defend ourselves against groups or nations that attack us? The political nature of all religions is most blatantly revealed in the events there. They have the basic division of Islam into the Sunnis, and the Shiites. Iran is Shiite, and supports the largely Shiite governments of Iraq and Syria against Sunni rebels, especially ISIS, which follows an extreme form of Sunniism. It also supports Shiite rebels in Yemen against the old Sunni government, and the Sunni attackers from Saudi Arabia. Oddly enough, Iran also at least gives tacit support to The Kurds, who follow a seemingly moderate version of Sunniism, against ISIS. Iran used to have a Kurdish minority, but kicked them out into Iraq and Turkey, decades ago. Talk about politics in religion!!
Getting back to Jon Markman’s comments, unless some precocious hacker decides to take down the internet (China and Russia have too much at stake to do it), it is here to stay. It should be the source of more possible profit than anything else for the forseeable future. Picking the plays will be the problem, though, just as with any part of the market. We depend on people like Mr. Markman to clue us in, since few of us know enough to make more than random guesses. Pick your guru, and be careful.
Pharmaceutical manipulation and over charging for drugs. Now, a company that shorts over priced stocks. I only remember of the name the word “left”. They had put out an expose’. Everybody should look up their reports.
Why focus just on the oil companies when they are making billions? What about AAPL which is making more money than anyone else? Just another case of PC claptrap, I suppose.