Beware the Canary in the Coal Mine Warning for Stocks

By Markos Kaminis:

Over the last month or more we’ve seen major momentum stocks failing. The names include a who’s who of last year’s greatest winners, like Amazon.com (Nasdaq: AMZN), Facebook (Nasdaq: FB), Tesla (Nasdaq: TSLA), Google (Nasdaq: GOOG & Nasdaq: GOOGL) and Netflix (Nasdaq: NFLX). Each of these ideas share a few important traits. They are all high-beta, richly valued stocks, and therefore the most vulnerable to systemic risk. They will exaggerate upside moves and also downside drives caused by broad market moving events. So, therefore, I say beware investors, because these are your canaries in the coal mine. Thus far, capital has flowed from them into other stocks, and mostly into value names like for instance Apple (Nasdaq: AAPL), which has soared lately. However, I am concerned that eventually this sector shift will transform into a full blown flight to safety. When that happens, the entire market should sell off, and so I suggest investors sell the SPDR S&P 500 (NYSE: SPY) and the PowerShares QQQ (Nasdaq: QQQ) and buy issues like the SPDR Gold Shares (NYSE: GLD), Market Vectors Gold Miners (NYSE: GDX) and iShares Silver Trust (NYSE: SLV). Those interested in some simple protection overnight and on weekends could use issues like the Velocity Shares Daily 2X VIX ST ETN (NYSE: TVIX) and iPath S&P 500 VIX ST Futures ETN (NYSE: VXX). See my report Beware the Canary in the Coal Mine Warning to Investors.

Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.

Stock Market Crash in 3 – 2 – 1

By The Greek:

I caught a lot of criticism when I said a stock market crash was imminent in March. The market celebrated Russia’s annexation of Crimea because it expected Vladimir Putin would stop there. However, since then the same issues that mysteriously arose in Crimea also surfaced in Eastern Ukraine. Russian media broadcast warnings to troubled Ukrainians, telling them that the new government in Kiev were neo-Nazis and had plans to segregate them. It is propaganda driven by the former KGB officer atop the Russian Federation. It has stirred fear, and has Ukrainians doing the damage themselves, though with a little help from well equipped and organized Russian commandos. And if Eastern Ukraine does not fall through referendum, then Russian troops are ready to roll right in and make it all good. You can expect those troops to arrive once the referendum is sold and implemented. But will Ukrainian forces and NATO just sit idly by and let a big chunk of Ukraine fall away? I suspect not, so sell the SPDR S&P 500 (NYSE: SPY), SPDR Dow Jones (NYSE: DIA), PowerShares QQQ (Nasdaq: QQQ), and consider buying the SPDR Gold Trust (NYSE: GLD), Market Vectors Gold Miners (NYSE: GDX), iShares Silver Trust (NYSE: SLV), Direxion Daily Gold Miners Bull 3X (NYSE: NUGT) and VelocityShares Daily 2X VIX (NYSE: TVIX). I think you’ll also enjoy my report: Stock Market Crash is Imminent – Part II: How You Like Me Now?

Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.

Facebook Stock Longs are Haunted by This Risk

By Markos N. Kaminis:

Facebook (NYSE: FB) shares are up another 1.8% today on the company’s strong first quarter earnings report. However, Facebook longs are haunted by a particular and disturbing risk. It’s a risk realized by similar business plans including the likes of AOL (NYSE: AOL), MySpace and other now long forgotten internet and technology plays. Don’t get me wrong; I’ve favored FB shares since the days when post-IPO punditry fell away and left the stock trading around $20. Recently, I salivated as FB drifted on macro issues that tanked the NASDAQ (Nasdaq: QQQ). I then penned Why Facebook is Falling and When to Buy it. I’ve advised Mark Zuckerberg indirectly through pen when his tech-oriented team failed to understand what Wall Street needed to see from it. It was a period where poor management from similar types drove the founder of Groupon (Nasdaq: GRPN) away after the great destruction of value in that stock. Today, Facebook and Google (Nasdaq: GOOG) are working hard to expand internet usage globally so as to maximize their opportunity. And Facebook is working hard to stay ahead of trends among internet users. Its acquisitions of Instagram and Oculus are examples of that, and proof that Zuck is paying attention. Facebook holders should likewise take note of the risk that should haunt the stock for the rest of its days. I’ve covered it in detail in my report: Watch for this Fly in Facebook’s Ointment.

Apple, Google & GE – Guess How 1 of These Should Copy the Others to Add Value

By Markos N. Kaminis

One of these things is not like the others. Can you guess which of these 3 broadly followed stocks could do better by copying something the other two do well? All three of these companies are innovators, but Apple (Nasdaq: AAPL) lags Google (Nasdaq: GOOG) and General Electric (NYSE: GE) in one key facet of its operations. Unfortunately, because of this inadequacy Apple’s stock is valued significantly cheaper than the rest. You would expect such a situation to offer an opportunity to purchase the stock. However, Apple has suffered its discount for an extended period of time, so those who have bought it over the past few years on the valuation reasoning have not seen the extraordinary gains they would have expected. I estimate that Apple could be worth 40% to 170% more today than the price it recently traded for if only Tim Cook would have a read of my latest report on the subject and do more for Apple shareholders by following my advice. Through the company’s earnings report communication today, it seemed to follow my guide, and the stock is up 7.5% in early trading Thursday. But it could be trading at $774 to $1450 instead of its current $564 if only management would have a read of my report: Apple, Google & GE – Which 1 of These Things is not Like the Others. It’s Apple’s responsibility to do so.

THURSDAY’S MARKET: ECB Drag but Service Sector Data Dictates the Day

The ECB played Debbie Downer in the very early going this AM. It un- fortunately took no action to support the continent, and made things worse by reporting a sadly slow level of price increase in March of just 0.5%. The ECB complaints about inflation are worrying U.S. markets today, as they continue to reflect a struggling European marketplace. What’s worse is that this likely reflects black market pressures on legal markets as the people continue to rebel against governments across Europe in a less obvious manner. However, after 8:30 AM data releases, stock futures bounced slightly into the green. We received a mildly higher jobless claims number, but the trade deficit expanded. Be careful though, because the deficit with China narrowed significantly and Europe was hardly changed, while the deficit with OPEC narrowed. It’s hard to see what’s happening here, so the early presumption of the market may be based on false footing. Nevertheless, until we receive the service sector data after the market open, we should drift higher. The day will clearly be dictated by the yet to come service sector reports and Mario Draghi’s comments.

U.S. Markets

Market ETF	YTD	TTM
Vanguard S&P 500 (NYSE: VOO)	+2.3%	+21.8%
iShares Dow Jones (NYSE: IYY)	+2.6%	+22.5%
Fidelity NASDAQ  ETF (Nasdaq: ONEQ)	+2.1%	+32.4%
ProShares Ultra Gold (NYSE: UGL)	+13.6%	-36.0%
ProShares Ultra Real Estate (NYSE: URE)	+18.3%	-0.7%
ProShares Ultra Oil (NYSE: UCO)	+2.7%	+11.1%
WisdomTree US$  Bullish (NYSE: USDU)	-0.4%	0%
iShares 20+ Yr. Treasury (NYSE: TLT)	+5.3%	-9.8%

Stock futures indicated higher earlier this morning before dipping on ECB non-action. Then at 8:30 we saw an uptick on questionably good trade data. Stocks appear set to start the day about unchanged, so the service sector data will dictate trade today.

International Markets

EUROPE	%	ASIA/PACIFIC	%
iShares Europe (NYSE: IEV)	+0.0%	Japan Equity (NYSE: JEQ)	+0.6%
WisdomTree UK (Nasdaq: DXPS)	0.0%	China Fund (NYSE: CHN)	+0.1%
Societe Generale ADR (OTC: SCGLY)	+0.3%	Asia Tigers (NYSE: GRR)	+0.8%
WisdomTree Germany (Nasdaq: DXGE)	+0.3%	Korea Equity (NYSE: KEF)	-0.5%
National Bank Greece (NYSE: NBG)	+2.7%	India Fund (NYSE: IFN)	+0.9%

International markets should be led by the ECB non-action today and concern about low inflation levels. Our early check of Europe shows little change on the release, with the Euro STOXX 50 about unchanged just after 8:00 AM ET. France and Germany are a bit lower on both Russian concerns and the ECB action, but emerging markets in Europe are doing well on yesterday’s momentum. Asia was led by Japan today, with the NIKKEI 225 up 0.8% into the close. Korea is lower, thanks to tensions with its northern neighbors.

Economic Data

THURSDAY’S ECONOMIC REPORT SCHEDULE
Economic Data Point	Prior	Expected	Actual
THURSDAY
ECB Monetary Policy			Unch.
International Trade	-$39.3B R	-$38.8B	-$42.3
ISM Non-Manufacturing	51.6	53.3
PMI Services Index	53.3	53.9
Bloomberg Consumer Comfort	-31.5
EIA Natural Gas Report	-57 Bcf
Challenger Job-Cut Report	41,835		34,399
Weekly Jobless Claims	310K R	320K	326K
Gallup US Payroll to Population

There is plenty of economic data on tap for today. In its early meeting, the European Central Bank (ECB) kept rates unchanged, which was in line with expectations. However, that might be viewed negatively today, as traders in the States were hopeful for more measures. The ECB expressed concern about excessively low inflation, but they may not have to worry about that for long, given that energy costs are likely to increase due to issues with Russia.

In the early going, the American data offered Challenger’s Job-Cuts Report, which showed a lower level of job cuts than the prior month. That’s good news for the American economy. Weekly Jobless Claims deteriorated by about 16K week-to-week to 326K, worse than expected but hardly important.

The international trade deficit widened where economists expected it to narrow. Looking at the data, the deficit with China narrowed significantly and with OPEC as well, while the deficit with the EU widened just slightly. The data leaves the answer here cloudy, and will require research beyond the press release. Two important service sector measures remain to be reported, plus consumer sentiment. You will want to pay close attention to those releases, as they will weigh heavily today.

Commodity Markets (Yesterday’s Close)

United States Oil (NYSE: USO)	-0.1%
iPath SP Crude Oil (NYSE: OIL)	-0.1%
U.S. Natural Gas (NYSE: UNG)	+2.0%
U.S. Gasoline (NYSE: UGA)	+0.2%
SPDR Gold Trust (NYSE: GLD)	+0.7%
Market Vectors Gold Miners (NYSE: GDX)	+2.7%
iShares Silver Trust (NYSE: SLV)	+0.7%
iPath DJ UBS Industrial Metals (NYSE: JJM)	+1.0%
Teucrium Corn ETF (NYSE: CORN)	-2.3%
Teucrium Wheat Fund (NYSE: WEAT)	-2.7%
Teucrium Soybean Fund (NYSE: SOYB)	-2.2%
iPath DJ-UBS Cocoa (NYSE: NIB)	-0.9%
iPath DJ-UBS Sugar (NYSE: SGG)	-1.1%
ICE Orange Juice Conc.	+1.9%
CME Lumber	-0.1%
CME Live Cattle	+0.5%

Natural gas storage data should show a lighter draw on warming weather in the Northeast, and perhaps starting next week, will begin to show inventory build. The difference between WTO and Brent crude is narrowing, while gold and silver are diverging, and each is worth looking into. Talks with Libya are being pinpointed for the change in oil prices. With regard to the precious metals, gold is first to move and more volatile than silver over the short-term on event catalysts, and we’ve had some of those recently; look to that for your catalyst here. See our work Putin & Yellen Support Gold Outlook.

Today Russia is demanding NATO justify its deployment plans along its border, as NATO nations are reportedly extremely supportive of Ukraine and perhaps willing to defend it. Ironically, NATO’s strong stand may support moderated energy prices, because Russia had thus far been left unchecked. Perhaps now Russian aggression will reevaluate.

Crop prices dropped yesterday, as the weather begins to warm across the nation and adequately saturated ground conditions offer hope for a good production year across the plains. Also, trade issues and geopolitical concerns may leave more agricultural goods home, where prices would fall on excess supply. Orange juice concentrate rose sharply yesterday.

Stock Activity

The day’s earnings outlook offers a short list, including fashion designer Perry Ellis (Nasdaq: PERY), semiconductor maker Micron Technology (NYSE: MU), Schnitzer Steel (Nasdaq: SCHN) and Global Payments (NYSE: GPN). Yesterday’s most active list was led by MannKind’s (Nasdaq: MNKD) gain of 74% and Pegasystems (Nasdaq: PEGA) decline of 49%.

EPS REPORTS
Company	Ticker
THURSDAY
China Finance Online	Nasdaq: JRJC
Edap Tms SA	Nasdaq: EDAP
Emmis Communications	Nasdaq: EMMS
Five Star Quality Care	NYSE: FVE
Franklin Covey	NYSE: FC
Global Payments	NYSE: GPN
MagnaChip Semiconductor	NYSE: MX
Micron Technology	NYSE: MU
Perry Ellis	Nasdaq: PERY
RPM International	NYSE: RPM
Schnitzer Steel Industries	Nasdaq: SCHN
SeaChange Int’l	Nasdaq: SEAC
SYNNEX	NYSE: SNX
Tat Technologies	Nasdaq: TATT
The Greenbrier Cos.	NYSE: GBX

YESTERDAY’S MOST ACTIVE STOCKS
BIGGEST GAINERS	% Gain
MannKind (Nasdaq: MNKD)	+74%
The Rubicon Project (Nasdaq: RUBI)	+34%
Autobytel (Nasdaq: ABTL)	+25%
XTL Biopharmaceutical (Nasdaq: XTLB)	+22%
IsoRay (NYSE: ISR)	+19%
VisionChina Media (Nasdaq: VISN)	+18%
Supertel Hospitality (Nasdaq: SPPRP)	+17%
SGOCO Group (Nasdaq: SGOC)	+16%
Solitario Exploration (NYSE: XPL)	+15%
Mines Management (NYSE: MGN)	+15%
BIGGEST LOSERS	% Drop
Pegasystems (Nasdaq: PEGA)	-49%
NewLead (Nasdaq: NEWL)	-10%
UniFirst (NYSE: UNF)	-10%
Amyris (Nasdaq: AMRS)	-9%
Apollo Education (Nasdaq: APOL)	-9%
Schmitt Industries (Nasdaq: SMIT)	-7%
Criteo SA (Nasdaq: CRTO)	-8%
Benefitfocus (Nasdaq: BNFT)	-8%
Kingtone Wirelessinfo (Nasdaq: KONE)	-7%
Body Central (Nasdaq: BODY)	-7%

Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.