Sell Stocks on Likely January Ill-Effects

Stocks were up stupen- dously in 2013, and the gains were widespread, so I think this year we could feel a void as a result. The January Effect may instead yield the ill-effects of a previously stellar market performance. With little or no fuel to sustain stock buying, the market will more likely see the selling of shares on pushed forward tax gains in January. The actionable advice here, therefore, is to sell stocks as I also previously suggested in the article, Sell the SPY on High.

Our founder earned clients a 23% average annual return over five years as a stock analyst on Wall Street. "The Greek" has written for institutional newsletters, Businessweek, Real Money, Seeking Alpha and others, while also appearing across TV and radio. While writing for Wall Street Greek, Mr. Kaminis presciently warned of the financial crisis.

Chart at Yahoo Finance

The charts of the SPDR S&P 500 (NYSE: SPY), SPDR Dow Jones Industrial Average (NYSE: DIA) and the PowerShares QQQ (Nasdaq: QQQ) all show the amazing performance of the stock market this past year. The gains were astounding, as you can see via the table below. Netflix (Nasdaq: NFLX) led all S&P 500 stocks higher, appreciating roughly 298%. The best performing stock sector was the Consumer Discretionary Sector, as evidenced here by the 41% gain of the XLY security. Still, the worst performing sector also rose this year. It was the telecom sector, and the performance of the iShares U.S. Telecommunications ETF (NYSE: IYZ) still managed 22.5% appreciation.

Security	2013 Performance
SPDR S&P 500 (SPY)	29.7%
SPDR Dow Jones (DIA)	26.7%
PowerShares QQQ (QQQ)	35.1%
Consumer Discretionary Sector SPDR (NYSE: XLY)	40.9%
iShares U.S. Telecommunications ETF (NYSE: IYZ)	22.5%
Netflix (NFLX)	297.6%

That’s widespread appreciation, and it portends a less than stellar January, if not an outright downslide. Just 38 stocks from within the S&P 500 depreciated on the year. So where then will the funds from tax loss selling flow to fuel a January Effect? I believe that whatever fuel exists will be exhausted early in January, or has already been exhausted in late December’s Santa Claus Rally.

Thus, stocks are in my opinion lacking positive seasonal catalyst in January, and given that stock market paper gains are aplenty, tax gain profit taking might occur. Such gains taken now instead of the end of 2013 allow investors to pay taxes in 2015. It’s a cash flow factor that leads me to suggest that the stock market is more likely to decline in early 2014 than it is to rise. Thus, I suggest investors act preemptively and sell the market and especially richly valued shares like Twitter (Nasdaq: TWTR) now. I suggested as much about Twitter and also about Alcatel-Lucent (NYSE: ALU) in recent articles published elsewhere.

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.

TUESDAY'S RUNDOWN: On Fed Clock Countdown

We’re on Fed clock countdown until tomorrow afternoon, when the Federal Reserve’s FOMC will issue their latest monetary policy. Investors are hinged here on the Fed taper and whether it happens or not; in other words, whether the Fed begins to slow down stimulus efforts for an economy that seems to not need it so bad based on data. What’s working against that call for tomorrow is the fact that holiday shopping matters a lot for this economy, and so the Fed may not want to risk disturbing that with a sudden stock market drop. Follow us at the blog, and also, please find a link to our latest write-up on Amazon.com (Nasdaq: AMZN), published exclusively elsewhere.

Tuesday’s Market Rundown

Market ETF	December 17	Year-to-Date
SPDR S&P 500 (NYSE: SPY)	-0.3%	+25.5%
SPDR Dow Jones (NYSE: DIA)	-0.1%	+21.6%
PowerShares (Nasdaq: QQQ)	-0.0%	+31.0%

Stocks are losing ground again today, given the price increase found in the Core CPI this morning. It’s all the more reason for the Fed to begin tapering.

Economic Events

ECONOMIC REPORT SCHEDULE
Economic Data Point	Prior	Expected	Actual
TUESDAY
FOMC Meeting Starts
Consumer Price Index	-0.1%	0.0%	0.0%
-Core CPI	+0.1%	+0.1%	+0.2%
Current Account	$-98.9 B	$-96.6 B	$-94.8 B
Housing Market Index	54 R	55	58
ICSC Weekly Store Sales	-1.6%		+4.8%
-Year-to-Year Pace	+1.5%		+2.0%
Redbook Store Sales	+2.6%		+2.9%

 -R symbolizes “revised”

The Core CPI figure reported today showed prices up 0.2% when excluding food and energy; it was exactly what market enthusiasts did not want to hear. The FOMC monetary policy meeting has begun, and tomorrow the Fed will let us know whether it will begin tapering asset purchases. Over the last few weeks we learned that unemployment fell to 7.0%, the level the Fed had tagged for slowing tapering. Now today we hear inflation is flirting with us. Bloomberg News ran a survey of economists on December 6 showing that an increased percentage of economists believed the Fed might begin tapering tomorrow (34%); that was up from the November poll showing just 17% in favor. The Fed has certainly given us enough time to digest the possibility that tapering is coming, so it could come at any time now.

Homebuilder sentiment improved according to the survey for November. The Housing Market Index increased to a mark of 58 from 54 the month before. I doubt builders are thinking much about how tapering could raise interest rates, so I would not read too much into this enthusiasm. It’s probably based on the latest gains in New Home Sales, and those could very likely be revised lower. As expectations for the taper meet improved economic data, at some point there should not be much lasting impact to rates. However, mortgage rates are especially vulnerable, because the Fed has been buying mortgage-backed securities, an action that specifically supports low mortgage rates.

Retail sales data picked up on a year-over-year basis this past week. Weather can play a role in this figure, but in the coming two periods, last minute shopping will make this data point clear and likely confirm a strong shopping period overall. I’ll have more to say about the retail industry soon, because an overall gain does not necessarily spell good news for your favorite retailer.

Overseas Markets

EUROPE	CLOSE	ASIA/PACIFIC	CLOSE
EURO STOXX 50	-1.2%	NIKKEI 225	+0.8%
German DAX	-0.9%	Hang Seng	-0.2%
CAC 40	-1.2%	S&P/ASX 200	+0.3%
FTSE 100	-0.5%	Korean KOSPI	+0.2%
Athens ASE	-0.0%	BSE India SENSEX	-0.2%

International markets have caught the Fed watch disease and will even exaggerate the movement of the U.S. market it seems over the next day or two.

Commodity Markets (1:00 PM ET)

WTI Crude	-0.1%
Brent Crude	-0.9%
NYMEX Natural Gas	-0.7%
RBOB Gasoline	-0.2%
Gold Spot	-0.8%
Silver Spot	-0.5%
COMEX Copper	-0.1%
CBOT Corn	+1.2%
CBOT Wheat	+0.3%
CBOT Soybeans	+0.7%
ICE Cocoa	-0.7%
ICE Sugar	-1.5%
ICE Orange Juice Conc.	+0.3%
CME Lumber	+0.0%
CME Live Cattle	-0.1%

Commodities are mostly coming down on expectations of a stronger dollar. Agricultural prices are very likely suffering due to this year’s weather trends. Note that American derived corn, wheat, soybeans and orange juice are higher today on weather, while foreign found cocoa and sugar are lower on the stronger dollar outlook.

Corporate Events

Earnings season will only grow quieter as we near the close of the year. The activity list is hot, though, with many stocks marking big gains and losses today.

HIGHLIGHTED EPS REPORTS
Company	Ticker
TUESDAY
Sanderson Farms	Nasdaq: SAFM
Huntington Bancshares (DIV)	Nasdaq: HBAN

MOST ACTIVE STOCKS
BIGGEST GAINERS	% Gain
Methes Energies (Nasdaq: MEIL)	+57%
KKR Financial (NYSE: KFN)	+29%
XTL Biopharmaceuticals (Nasdaq: XTLB)	+27%
LightPath Technologies (Nasdaq: LPTH)	+22%
iRobot (Nasdaq: IRBT)	+17%
Broadwind Energy (Nasdaq: BWEN)	+14%
Stereotaxis (Nasdaq: STXS)	+14%
Puma Biotechnology (Nasdaq: PBYI)	+13%
Rick’s Cabaret (Nasdaq: RICK)	+12%
Kopin (Nasdaq: KOPN)	+12%
BIGGEST LOSERS	% Drop
Fiserv (Nasdaq: FISV)	-50%
Medidata Solutions (Nasdaq: MDSO)	-50%
BorgWarner (NYSE: BWA)	-50%
Targacept (Nasdaq: TRGT)	-31%
CombiMatrix (Nasdaq: CBMX)	-21%
FuelCell Energy (Nasdaq: FCEL)	-21%
Rockwell Medical (Nasdaq: RMTI)	-20%
Dynasil (Nasdaq: DYSL)	-17%
Kingtone Wirelessinfo (Nasdaq: KONE)	-18%
CGG (NYSE: CGG)	-16%

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.

TUESDAY'S SECURITIES MARKETS SUMMARY: Focus Found the Fed

We broke a record for the S&P 500 yesterday, but today the focus found the Fed and its planned meeting for next week. Investors are more than curious about what may come from it, but traders are terrified. Given the rich gains put in this year, why not take some money off the table ahead of the risky event, and so selling should continue through the week. Follow us at the blog, and also, please find a link to our latest write-up on Apple (AAPL) below, published exclusively elsewhere.

Tuesday’s Securities Markets

Market ETF	December 10	Year-to-Date
SPDR S&P 500 (NYSE: SPY)	-0.4%	+28.8%
SPDR Dow Jones (NYSE: DIA)	-0.3%	+25.4%
PowerShares (Nasdaq: QQQ)	-0.1%	+32.5%

Coming off the rich record set for the S&P 500 Monday, stocks faltered Tuesday. Most of the attribution rightfully went to trader concerns about the upcoming Federal Reserve meeting next week. Also, the Congressional budget negotiations were running up against a Friday deadline, but those look to have been resolved this evening.

Economic Events

ECONOMIC REPORT SCHEDULE
Economic Data Point	Prior	Expected	Actual
TUESDAY
NFIB Small Business Optimism Index	91.6	92.4	92.5
JOLTS – Job Openings	3.883 M R	3.905 M	3.925 M
Wholesale Trade (Inventories)	+0.5%	+0.4%	+1.4%
-Sales	+0.8%		+1.0%
ICSC Weekly Store Sales	-2.8%		-1.6%
-Year-to-Year Pace	+2.5%		+1.5%
Redbook Store Sales	+4.9%		+2.6%

 -R symbolizes “revised”

On the economic front, the NFIB Small Business Optimism Index was reported today covering November, the month after the government shut down in October and we almost blew our sovereign credit rating via the debt ceiling debacle. In November, therefore, we saw improved sentiment, with the index rising to a mark of 92.5, from 91.6. It was higher than economists forecasted as well. It looks like next month’s reading will also get a lift from reported GDP growth and an improved labor situation, but Obamacare weighs as well on the minds of small businessmen, so let’s see.

Job openings increased, according to the latest JOLTS Report, and wholesale business sales and inventory grew healthily. We cannot read too much into the weekly retail sales data due to the Black Friday holiday and calendar issues; not even the year-over-year figures. Wait another week for a clearer view. Unfortunately, all the good and positive economic news only makes Fed fear flourish.

Overseas Markets

EUROPE	CLOSE	ASIA/PACIFIC	CLOSE
EURO STOXX 50	-0.9%	NIKKEI 225	-0.2%
German DAX	-0.9%	Hang Seng	-0.3%
CAC 40	-1.0%	S&P/ASX 200	-0.0%
FTSE 100	-0.5%	Korean KOSPI	-0.3%
Athens ASE	+1.5%	BSE India SENSEX	-0.3%

International markets were mostly lower Tuesday, save the Athens exchange on this table. It had nothing to do with Nelson Mandela, I assure you, but probably a lot to do with global trader (not investor) trepidation about what the U.S. Fed does next. That’s because Europe probably still prefers to win the race to the fiat currency bottom. Geopolitical flares in the Ukraine, Thailand and the Central African Republic do not help either. And with England and Italy placed in the same World Cup Group and Portugal and Germany and the Netherlands and Spain likewise matched, I suppose there’s reason for disappointment in Europe.

Commodity Markets (AFTERNOON)

WTI Crude	+1.1%
Brent Crude	+0.2%
NYMEX Natural Gas	+0.1%
RBOB Gasoline	+0.5%
Gold Spot	+1.6%
Silver Spot	+2.2%
COMEX Copper	+0.1%
CBOT Corn	-0.5%
CBOT Wheat	-1.8%
CBOT Soybeans	-0.4%
ICE Cocoa	+0.8%
ICE Sugar	+0.4%
ICE Orange Juice Conc.	+1.1%
CME Lumber	+2.6%
CME Live Cattle	-0.1%

Precious metals curiously continue to gain support, and while I believe I know why, I’m cautious about saying so publicly. I suggest buying the metals as strongly as I have ever suggested it, and pronto. These are must own assets today, without too much consideration to current value. However, relatively speaking, you are getting value versus the highs set over the last year or two. And please, do not buy bitcoins! Look to weather to explain much of the changes in agricultural prices these days. Energy is moving higher on expectations for increasing demand as the U.S. economy finds better traction.

Corporate Events

Two investor conferences from Oppenheimer (NYSE: OPY) and Goldman Sachs (NYSE: GS) brought some company specific data to the fore today, with just a handful of earnings reports to follow. Your favorite blogger authored an article on Apple (Nasdaq: AAPL) over the weekend, published exclusively at the site of our friends at Seeking Alpha. Coincidentally, within it we mentioned a relative importance to Twitter (NYSE: TWTR) as well, so we are not surprised by the strength in the social media maven today, up 5.8%. You can find it here: Apple’s Plans for Topsy are Highly Value Added.

HIGHLIGHTED EPS REPORTS
Company	Ticker
TUESDAY
Toll Brothers	NYSE: TOL
NCI Building Systems	NYSE: NCS
H&R Block	NYSE: HRB
The Pantry	Nasdaq: PTRY
Autozone	NYSE: AZO
Medley Capital (Call)	NYSE: MCC
Amgen (Oppenheimer Conf.)	Nasdaq: AMGN
Questcor Pharma (Oppenheimer)	Nasdaq: QCOR
Wells Fargo (Goldman Conf.)	NYSE: WFC
J.P. Morgan Chase (Goldman)	NYSE: JPM

MOST ACTIVE STOCKS
BIGGEST GAINERS	% Gain
Pacific Booker Minerals (NYSE: PBM)	+66%
Kingtone Wirelessinfo (Nasdaq: KONE)	+36%
Enanta Pharmaceuticals (Nasdaq: ENTA)	+27%
China Yida Holding (Nasdaq: CNYD)	+25%
ARC Group Worldwide (Nasdaq: ARCW)	+19%
Tanzanian Royalty Exploration (NYSE: TRX)	+12%
ClearSign Combustion (Nasdaq: CLIR)	+17%
Erickson Air-Crane (NYSE: EAC)	+17%
InterCloud Systems (Nasdaq: ICLDW)	+9%
Methes Energies (Nasdaq: MEIL)	+13%
BIGGEST LOSERS	% Drop
Genco Shipping (NYSE: GNK)	-18%
Syntroleum (Nasdaq: SYNM)	-16%
eOn Communications (Nasdaq: EONC)	-13%
NewLead Holdings (Nasdaq: NEWL)	-13%
Eagle Bulk Shipping (Nasdaq: EGLE)	-12%
Lumber Liquidators (NYSE: LL)	-12%
Mattson Technology (Nasdaq: MTSN)	-11%
TG Therapeutics (Nasdaq: TGTX)	-12%
CytRx (Nasdaq: CYTR)	-11%
Synergetics USA (Nasdaq: SURG)	-10%

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.