Facebook Can Weather Big Storms

Last Thursday’s market decline had me watering at the mouth, mainly because of the decline of a few stocks on my shopping list. Facebook (Nasdaq: FB) is one of those names, and it’s the kind of stock I think you have to buy when the market goes on sale. Facebook can weather big storms. Unlike Tesla (Nasdaq: TSLA), which I recommended the sale of last week, Facebook (FB) is a momentum name I’m itching to purchase even today. I was lonely when Facebook dipped under $20 a few years ago when I was telling everyone and anyone to buy it. Back then, believe it or not, there were few of you saying the same thing. As it moved toward $30 I continued to reassure friends and followers that it was still a screaming buy. And now that it’s trading in the upper $70s, I’m still looking for entry points for this big future 10-bagger, as Peter Lynch would put it. See the full report on Facebook here.

Don’t Believe the Hype About a Housing Downturn!

Don’t believe the hype! Media and most reporters grabbed hold of the fact that the Pending Home Sales Index declined in August, and in so doing, missed the point that the modest decline still left the index near its highest point this year and on a trend line higher. The Pending Home Sales Index reported Monday for the month of August declined 1.0% month-to-month to a level of 104.7, from 105.8 (revised from 105.9). That sounds like a bad result, and it’s the point of notation most reported on. However, looking just a little closer at the data, which is why you follow me, we see that this modest decline follows July’s sharp increase of 3.2%, and leaves the index still at the second highest level it has been this year. See the full housing report here.

VOLATILITY! Beware Hurricane Force Trade Winds

The current trading week threatens to be extremely volatile, with the potential for hurricane force trade winds. A collision of market forces coming together this week make for a volatile trading period. You might want to find a safe place to hunker down through the period so you can rest easy, unless you want to surf the waves with appropriate trading strategies. I’m telling my friends and followers to avoid the SPDR S&P 500 (NYSE: SPY) and other passive stakes this week and to reel in holdings in the most richly valued favorites of this market. We’ve already seen signs of the storm, with trading opening the week sharply lower Monday before a swift recovery and waves of volatility swept through. There are buyers and sellers on the loose, and the right set of natural and unnatural forces should come together to make for choppy trade this week. See the full report here.

Yellen is Right - Sell Biotech Stocks Now

Despite their high times of late, I agree with Janet Yellen’s Fed and see risk in the extended biotech sector today. Biotechnology stocks have outperformed the broader market this year, as the high risk, high-beta issues have remained en vogue. However, for two very important reasons, I would sell biotechnology today. So I’m suggesting holders of the popular iShares NASDAQ Biotechnology (Nasdaq: IBB) security divest positions. For those believers in specific biotech ideas, like say Gilead (Nasdaq: GILD) for instance, who want to hold on for the longer term, I suggest hedging industry risk by writing calls or holding puts in the IBB security if enough liquidity exists in the options market. Otherwise, you might use unlevered short industry ETFs if possible, or pare trade your name against another. See the full report here: I Agree with Yellen, Sell Biotech Right Now.

GLD – The Real Reason Gold has No Support

On Thursday, when the market tanked, television media made a fuss about the lack of safe haven demand for gold. Readers of this column should not have been surprised though, given my regular reminders about the importance of the strengthening dollar against gold and the fact that there was not much tangible danger to run away from Thursday. Though the media was not perfectly accurate about the move in gold, as the SPDR Gold Trust (NYSE: GLD) did rise on the day, I continue to dissuade investment in gold and the SPDR Gold Trust (NYSE: GLD) near-term. My reason is the same Fed rate outlook and strengthening dollar driving the commodity since peace broke out between Russia and Ukraine. While it’s possible capital could scare from stocks near-term, I’m not sure it wouldn’t choose cash over gold given the dollar drive. I would not consider a long position in gold before any significant terrorism catalyst or other unexpected event catalyst gave good cause for it. See the full story on gold here.

Tesla is Going to Power Down Now

Tesla (Nasdaq: TSLA) shares are up approximately 66% year-to-date, but more recent price action shows some question in the stock. The reason for that may have more to do with Wall Street than it does with Tesla, and it could continue for at least another week to through the rest of 2014. I never base my expectations for a stock solely on recent price action no matter how much a stock has risen or fallen. However, in this case, some important underlying factors seem to indicate that TSLA may have topped out, and may not move higher for awhile if not until after Thanksgiving. The reason for this has nothing to do with happenings around Tesla’s Gigafactory or new vehicle development. It has nothing to do with international expansion or government subsidies for alternative energy vehicles. To see why, read my article Why Tesla’s Run is Done.

The Real Reason Stocks are Sinking

It’s the job of market media to seek out and inform investors of the factors driving market moves, but they are not always correct in their quick-draw determinations. After all, the people mostly making these determinations are television producers and newspaper and website editors. Sure they try to take their lead from market strategists and influential investors and traders, but oftentimes the surveyed individuals simply talk their book or are otherwise wrong. Business television was telling us last Thursday that the driver of the tanking stock market was interest rate fear on Fed member speak and an obscure legislative action out of Russia that could threaten global stability supposedly. Both those ideas are reaches; I think that much should be clear, as we just had a very clear communication from the FOMC. The real driver of the stock market tanking last week was two-fold in my view, and includes an underlying capital flow driver and a catalyst spooking capital today. To put it simply for those of you who need to know right now, the fiscal year-end of hedge funds and other institutional investors have them on the ready to lock in their yearly gains that are at risk now. Today’s specific news event likely acting as spooking catalyst came from the Iraqi Prime Minister, who said in New York that there is a credible terror threat against U.S. and French subway systems. See the full report, The Real Reason Stocks Tanked here.

EMCORE Rated Strong Buy

EMCORE (Nasdaq: EMKR) soared 25% last Thursday and was among the day’s greatest gainers. The catalyst was news that the company would sell its Space Photovoltaics Business, along with news of its CEO transition plan and tax loss preservation plan. I have reviewed the press releases and the company’s conference call detailing the activities and have analyzed the day’s drivers of price appreciation. They were value-added actions taken by management with the guidance of investment bank advisory. EMKR is now a more focused business operation with price multiple metrics better aligned to like firms. However, as further value-added actions occur, including cost reductions to find operating efficiencies, and as potential future divestitures follow, I expect EMKR to add value for stakeholders. See my full report on EMCORE.

What’s Good for Bank of America is Good for Real Estate

Bank of America (NYSE: BAC) reported some good news recently that I believe supports the case for the stock. The favorable benefits reach beyond shareholders, though, to serve the entire real estate sector in my opinion. And in turn, like a cycle of life, I expect the benefits from real estate to be paid forward again and back to Bank of America. See the full report on Bank of America here. Article should interest investors in Citigroup (NYSE: C), J.P. Morgan Chase (NYSE: JPM), Morgan Stanley (NYSE: MS), Wells Fargo (NYSE: WFC), U.S. Bancorp (NYSE: USB).

Nostalgic old ad, one of my first created... 

Apple or Google - Which Stock do You Prefer?

If you could only own one of these stocks at a time, which would you own today, Apple (Nasdaq: AAPL) or Google (Nasdaq: GOOG)? Our friends at CNBC posed the question on the air, and I feel compelled to answer it. Without further ado, you should know that I choose Apple over Google (Nasdaq: GOOGL) without reservation, as it stands at deep discount to Google’s share value, but with the high prospect of upside revision to growth estimates and before its new product and service catalysts begin to prove themselves to the investor marketplace. So, while I would own both securities and love Google, if I had to choose between the two, Apple would be my pick today. See my full report, Apple or Google, here.

Amazon Benefits Asymmetrically as Retail Grows

The Census Bureau just reported great news for Amazon.com (Nasdaq: AMZN). Better monthly retail sales were reported for August than economists expected. But that’s good news for the entire industry right? Wrong! Not while Amazon.com continues to steal market share from brick and mortar stores, as is evident in the asymmetric performance of retailers across the spectrum and the suddenly exposed excess capacity in the retail industry. See the full report here, Good News for Amazon.

GOLD – Terrorism Risk is Shockingly Absent from Analyses

The SPDR Gold Trust (NYSE: GLD) has reflected gold’s decline in the absence of Russia from the risk threat spectrum since Russia and Ukraine agreed to a ceasefire and plan toward peace. Given the removal of the Russian threat to the euro and potentially the dollar, which I’ve discussed in detail in the past, traders have had only interest rate expectations and dollar strengthening to look toward for guidance. It’s a serious weight against gold now, and should have investors divesting positions. As a result, the GLD security is declining precipitously. But where is terrorism risk assessment in our scenario analysis? Given the threats of the Islamic State and recent discoveries of plots in Australia and against the United Kingdom, shouldn’t we be thinking about this? See my full report on terrorism and gold here.

Real Estate this Week

In real estate this week, we receive data on new and existing home sales, and we get the first clean reading of mortgage activity since before Labor Day. Also look for a housing price data point to color the view and for K.B. Home’s (NYSE: KBH) solid earnings news. Barron’s brings good news for the housing sector as it sheds light on the improving situation at Bank of America (NYSE: BAC), which has to benefit the real estate relatives. See the full real estate report here. Article should interest investors in the SPDR Homebuilders (NYSE: XHB), Home Depot (NYSE: HD), Annaly Capital (NYSE: NLY), iShares U.S. Real Estate (NYSE: IYR), Lennar (NYSE: LEN) and MGIC Investment (NYSE: MTG).

Why the Recent Real Estate Volatility?

The iShares U.S. Real Estate (NYSE: IYR) security saw a sharp move last week on several housing data point catalysts. However, by the end of the day last Wednesday, it was underwater. Still, after my review of the data, and my expectations for what’s ahead, I believe real estate makes a solid investment. Whether it is commercial, industrial or residential property, or if you cannot afford physical property, than the iShares U.S. Real Estate ETF (IYR) should also serve you well. See the full real estate report here.

GLD – Sell Any Gold Strength on the Fed Today

If the Federal Reserve’s announcement today offers the mild tone I am expecting and if the setup of the last several days drives an upward move in the SPDR Gold Trust (NYSE: GLD), I would use it to sell stakes. While my long-term perspective remains bullish for gold, I see near-term downside that traders need not bear. The writing is on the wall in big bold print and it is evident in the chart of the SPDR Gold Trust (NYSE: GLD) as well. No matter what the Federal Reserve does in its latest monetary policy announcement, it is headed toward raising interest rates. The dollar has already strengthened significantly against some currencies, but not against the broader base. See the full report here.

How to Play Stocks Around the Fed Today

Last week I published an article entitled Buy this Trough as the Latest Fed Scare is Unfounded. I continue to expect the Federal Reserve’s FOMC monetary policy decision and press conference to reflect the mild message conveyed by Janet Yellen in her Jackson Hole speech and for stocks to move higher. However, the Fed Forecasts, which will be published today, have sunk stocks in the past and continue to threaten, though perhaps to a lesser extent now that they are better understood. Passive investors in the broader market ETF, the SPDR S&P 500 (NYSE: SPY) might want to hedge bets a bit. This article discusses tools for hedging event risk. Rather than placing a long or short bet on the SPY today, I suggest investors hold both call and put options to bet on volatility in the security, whether it move higher or lower. Your risk comes with the lack of a move in the SPY, but if the ETF rises or falls significantly, you should overcome option costs for profit today in my view. Of course, this trade offers lower upside than a naked long or short position. See the full report here.

GOLD - Waiting on Russian Response to EU

The EU announced that a new round of sanctions against Russia would take hold starting Friday. Because of the ceasefire agreement between Russia and Ukraine, the sanctions were held up as Europe debated what to do. The final conclusion of the group of nations was to implement the sanctions despite the new peace in Ukraine, but to review and/or revoke them in less than a month’s time depending on progress in Ukraine. Europe’s mistrust of Russia is evident in the way it went about this, and now the ball is in Russia’s court. It seems that what was meant by the EU to be a power play against Russia has exposed its division and weakness. I believe this leaves Russia more likely to now test the European resolve by countering these latest sanctions with some harsh Russian rebuttal. Such an action would serve to disrupt the euro, lay warning to the dollar and boost the price of gold. Much depends on the patience of Russia and its next move. See full report here. Article should interest SPDR Gold Trust (NYSE: GLD), Market Vectors Gold Miners (NYSE: GDX), Direxion Daily Gold Bull 3X (NYSE: NUGT), iShares Silver Trust (NYSE: SLV), Goldcorp (NYSE: GG).

What’s Driving the Market this Week – The Fed, Scots & Fiscal Calendar

This week three factors weigh heavily. I dispelled fear of Fed action in my article Market Manipulation? Fed Fear Unfounded, but it appears many have not read the report. It’s okay, as it seems to set up an opportunity for gain, if not just for the manipulating forces, then for my followers too. The Scottish referendum worries me, because as Scotland pulls away with all those tax dollars today paid into UK coffers, and with public service worker benefits and other corporate ties at stake, there’s too much uncertainty about the impact to the important U.K. market and broader ties. Finally, the fiscal calendar of many institutional investors is closing this month, if not in August or October. I think this is driving some selling in the big winners of the last year, because not everyone cares about having a Tesla (Nasdaq: TSLA) show up in its statement of holdings. You know, managers can always mention the names in their annual letters instead and safeguard some profits today.

Also see our report: Gold – Waiting on a Russian Rebuttal to the EU

1-Year Chart of SPY at Yahoo

Stocks have enjoyed quite the run this year, as is evident in the chart here. However, the approaching change in Fed direction weighs on the heights reached here, as the cost of capital will increase for growth names in the S&P 500 and the Russell 2000. The Scottish referendum carries with it scary repercussions for the Brits and too much disruption for the rest of us, so pray for a “No” vote victory here and an intact United Kingdom. Too many gains are at stake as institutional managers look to close their books for the fiscal year. This latest selling in last year’s winners might continue through the month and maybe next as well.

Security	YTD	TTM
SPDR S&P 500 (NYSE: SPY)	+7.7%	+17.5%
SPDR Dow Jones (NYSE: DIA)	+2.9%	+10.8%
PowerShares QQQ (Nasdaq: QQQ)	+11.9%	+26.1%
iPath S&P 500 VIX ST Ft (NYSE: VXX)	-31%	-49%
PIMCO Total Return (NYSE: BOND)	+3.7%	+4.2%
PowerShares DB US $ Bull (NYSE: UUP)	+4.2%	+2.0%
SPDR Gold Shares (NYSE: GLD)	+2.2%	-7.2%
iPath S&P Crude Oil (NYSE: OIL)	-2.5%	-12.1%

Week Ahead

The Economic Reports
This week’s economic report schedule is full, however inconsequential to stocks. We’ve got our share of manufacturing data, housing reports, pricing measures and broader trade and economic growth barometers. Obviously, most important of all is the FOMC Monetary Policy release and the Fed forecasts, which unfortunately include the Fed Funds Rate forecast. They will serve to remind profit-rich investors of the end of free money coming.

On the manufacturing end, industrial production data was reported Monday, and showed a slight moderation and important miss against economists’ expectations. However, the Empire State Manufacturing Survey, which is regional, gained sharply. Later in the week, we’ll receive data from the Philly Fed as well.

Pricing measures weigh somewhat heavily this week, with both the Producer and Consumer Price Indices due. Also, the Atlanta Fed’s Business Inflation Expectations Index is published later this week. The Producer Price Index is expected to offer no sign of inflation, but the Core CPI measure is expected to post a 0.2% increase, which is borderline-worrisome but not quite there yet. I do not expect these measures to affect the Fed’s monetary policy release Wednesday.

Real Estate enthusiasts have the Housing Market Index, which measures homebuilder sentiment, and the Housing Starts data to look forward to this week along with the regular mortgage data. Homebuilders are expected to sing a better tune, with the HMI seen inching higher. Housing Starts are expected to ease off last month’s annual pace gains, but permit activity will remain steady, offering a solid note for stability moving forward.

The broader measures of the economy are lead by the Leading Economic Indicators (LEI) report, due Friday. Economists see the latest report showing a slower pace of economic expansion than in the most recent reporting, and this is consistent with other economic data which have shown some moderation of late. I would not be surprised if the LEI data comes in lighter than expected or if the prior month is revised lower.

THIS WEEK’S ECONOMIC REPORT SCHEDULE
Economic Data Point	Prior	Exp.	Actual
MONDAY
Empire State Mfg. Survey	14.69	15.9	27.54
Industrial Production	0.2%	0.3%	-0.1%
-Capacity Utilization	79.1%	79.3%	78.8%
OECD Global Economic Outlook	0.7%	0.1%	-0.4%
TUESDAY
Congress Begins ISIS Discussion
UN General Assembly
ICSC Weekly Store Sales	0.7%
-Year-to-Year Pace	4.0%
Redbook Store Sales	4.9%
Producer Price Index	0.1%	0.0%
-Core PPI	0.2%	0.1%
Treasury Int’l Capital (TIC)
WEDNESDAY
Current Account	-$111.2 B	-$114.0 B
Mortgage Activity	-7.2%
Consumer Price Index	0.1%	0.0%
-Core CPI	0.1%	0.2%
Housing Market Index	55	56
EIA Petroleum Status
-Crude Oil Inventory	-1.0 MB
-Gasoline Inventory	+2.4 MB
FOMC Monetary Policy
-FOMC Forecasts
-Chairwoman’s Press Conference
THURSDAY
Housing Starts	1.093	1.038
-Permits	1.052	1.055
Weekly Jobless Claims	315K	305K
EIA Natural Gas Report	92 bcf
Philly Fed Index	28.0	23.0
Fisher Speaks
FRIDAY
Leading Economic Indicators	0.9%	0.4%
Atlanta Fed Biz Inflation Expectations

The earnings schedule is light as we approach the end of the third quarter. Still, we have some education names to look forward to and several significant tech names, including Oracle, Adobe and Red Hat. For those of you looking for broader takeaways, you can keep track of FedEx this week and Herman Miller for signs of business spending and general economic expansion. Rite Aid will go bankrupt; you heard it here, and I don’t care how much Cramer loves this name. I visit the stores, and Rite Aid is the next RadioShack, unless it sells out to a stronger competitor.

EPS REPORTS
Company	Ticker
MONDAY
Analogic	Nasdaq: ALOG
Allied Capital Financial	NYSE: AFC
Biota Pharmaceuticals	Nasdaq: BOTA
Corinthian Colleges	Nasdaq: COCO
Doral Financial	NYSE: DRL
Education Management	Nasdaq: EDMC
Fabrinet	NYSE: FN
ITT Educational	NYSE: ESI
Majesco Entertainment	Nasdaq: COOL
NAPCO Security Technologies	Nasdaq: NSSC
UniTek Global Services	Nasdaq: UNTK
TUESDAY
Adobe Systems	Nasdaq: ADBE
Apogee Enterprises	Nasdaq: APOG
FactSet Research Systems	NYSE: FDS
Phibro Animal Health	Nasdaq: PAHC
WEDNESDAY
Cintas	Nasdaq: CTAS
CLARCOR	NYSE: CLC
Cracker Barrel Old Country	Nasdaq: CBRL
FedEx	NYSE: FDX
General Mills	NYSE: GIS
Herman Miller	Nasdaq: MLHR
Lennar	NYSE: LEN
Pier 1 Imports	NYSE: PIR
Scholastic	Nasdaq: SCHL
United Natural Foods	Nasdaq: UNFI
THURSDAY
ConAgra Foods	NYSE: CAG
IHS Inc.	NYSE: IHS
Marcus Corp.	NYSE: MCS
Oracle	Nasdaq: ORCL
Red Hat	NYSE: RHT
Rite Aid	NYSE: RAD
Rosetta Genomics	Nasdaq: ROSG
TIBCO Software	Nasdaq: TIBX
FRIDAY
NO REPORTS IN US

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.