Browsing articles in "Market"

Don’t Trust Wall Street On Oil

Nov 18, 2015   //   by Profitly   //   Market, Profitly  //  Comments Off on Don’t Trust Wall Street On Oil

Did Wall Street downgrade oil just as the black gold made a bottom?

While we aren’t going to start making predictions on whether oil has or has not bottomed yet, it would be pretty ironic if just days/weeks before oil hit its recent low of $44 a barrel, Wall Street finally cut their forecasts for 2015. Doing a quick Google search, you can’t find anyone out there that predicted the monstrous decline in oil. Sure, some said it could fall to $90 or even $80. But nobody, and we mean nobody, predicted oil would fall into the $40 range.

After falling 60% and dropping below $45 a barrel, oil prices have climbed $16 a barrel over the past month and Brent is now trading above $60. What’s more, almost every major bank on Wall Street downgraded oil just as the so called black gold hit its recent lows.

Goldman is hoping this isn’t the case. In a recent note, they said that the decline in the number of oil rigs in the U.S. (to the fewest since August 2011) is still not enough to halt production growth and push down prices.

“The rig count decline is still not sufficient, in our view, to achieve the slowdown in U.S. production growth required to balance the oil market,” Goldman said. “Oil prices need to remain lower in the coming quarters in order for the announced capex guidance and rig reduction to materialize into sufficiently lower production growth.”

So will this be a W or a U shaped recovery? Who knows, but below are the dates and targets of the cuts by some of the biggest firms on Wall Street.

First to downgrade was Morgan Stanley. In a report dated December 5, the bank said oil prices could fall as low as $43 a barrel in 2015. They also cut their base-case outlook for Brent to $70 from $98. Brent for January was trading around $66 a barrel at the time.

On January 4, Citi lowered their Brent outlook to $63 a barrel for 2015. Just a few weeks later, the bank came out with yet another downgrade to $54. Brent was trading around $52 on January 4 and $58 on February 9, the day of the bank’s most recent downgrade.

Next was Goldman, coming out with a pessimistic report on January 12 as oil touched $47 a barrel. Analysts at Goldman Sachs cut their 2015 Brent forecast to $50.40 a barrel from $83.75. Brent was then trading at $47.

Third is Bank of America, cutting their forecasts just three days later on January 15. Analysts at the firm lowered their average 2015 Brent price forecast to $52 per barrel from $77. Brent was trading around $48.

The downgrades started to pick up at this point, with JP Morgan chiming in four days later. The bank cut its 2015 average Brent crude price forecast to $49 a barrel from $82 a barrel. Brent was trading around $49 a barrel at the time.

Then Barclays came out with a downgrade on January 28, slashing their 2015 target to $44 from $72. Brent was then trading around $49.

So next time you want to make a trade, particularly in a volatile market like oil, proceed with caution and do your own research as well.

The Biggest IPOs and What’s to Come

May 5, 2015   //   by Profitly   //   Market, Profitly  //  Comments Off on The Biggest IPOs and What’s to Come


(AP Photo/Jason DeCrow)

2014 was definitely the year of the tech IPO. Will we see a similar trend in 2015? So far we have had big companies (although not all tech) like Shake Shack, Airbnb, Uber, Box, Snapchat, and Spotify either IPO or give traders/investors hints that an IPO may be coming soon. Some analysts are going as far as predicting that 2015 will be an even bigger year for IPOs.

Alibaba was obviously the biggest and most anticipated IPO last year, but while the technology sector sparked plenty of enthusiasm, not everyone came out on top. Shares of some winners, such as TubeMogul and Zendesk, climbed skyward, while losers, such as and, struggled to trade above their (overly optimistic) debut prices.

Here’s a look at 10 IPOs (via Quartz) that received the most media and investor attention and how they’ve fared in the markets as the year comes to a close.


Debut price: $92.70

Closing price as of February 20: $86.64

Gain/loss: -7%

S&P performance since IPO: +5%

The Chinese ecommerce giant didn’t just claim the biggest IPO of the year—its gangbuster debut was recorded as the world’s largest in history. Shares skyrocketed after the company raked in $9 billion in online sales on Singles’ Day—a made-up shopping holiday in China (akin to Cyber Monday in the US) created by no other than Alibaba (BABA) itself.

Since debuting on the New York Stock Exchange at $92.70, the stock peaked at about $120 in November and currently hovers above the $100 mark. If the company’s YunOS mobile operating system is successful in eating away at Android’s 90% market share in China, it’s likely Alibaba’s trajectory will continue up, up, up.


Debut price: $20.50

Closing price as of February 20: $16.09

Gain/loss: -15%

S&P performance since IPO: +13%

From the beginning, investors worried about King (KING). Was the one-hit wonder game Candy Crush, which made up nearly 80% of its sales in 2013, enough to build a public company? Trepidation led to the stock opening at $20.50, less than its already-discounted pricing. Since mid-July, shares have performed under the IPO price.

In August, on the heels of its earnings, the game maker saw its largest plunge in after-hours trading, falling more than 20% to $13.99. The stock also hit record low in October at $10.68 (closing at $11.25). Though King is increasing revenue from other titles, the number of paying customers is dwindling. Given that, it’s become hard to ignore the company’s roots. Building on the blockbuster success of Candy Crush, King released another addition in November: Candy Crush Soda Saga.


Debut price: $28.65

Closing price as of February 20: $45.07

Gain/loss: +43%

S&P performance since IPO: +7%

Enthusiasm for GoPro’s (GPRO) tiny action cameras boosted shares about 20% to $28.65 right out the gate. The camera maker has been enjoying steady growth, peaking at $98.47 in October. That month, GoPro raised more capital with a secondary offering, but investors, concerned about the dilution of their ownership, pushed the stock down 5% to $75.

Now investors seem buoyed by recent news that GoPro is developing a line of consumer drones expected to go on sale in late 2015, and a partnership that would outfit Tour de France bicycles with its point-of-view cameras.


Debut price: $11.40

Closing price as of February 20: $24.26

Gain/loss: +80%

S&P performance since IPO: +11%

Investors are clearly pleased with Zendesk (ZEN), a maker of customer service software used by businesses. On its first day of trading, the stock closed 49% higher than its initial pricing at $9 a share. Since then, the company posted strong earnings, and shares are currently hovering in the $20 to $25 range. In December, Zendesk debuted new tools that let clients embed help widgets on mobile, games, and websites.


Debut price: $40

Closing price as of February 20: $41.36

Gain/loss: 21%

S&P performance since IPO: +11%

Grubhub’s (GRUB) last earnings report highlighted impressive profit and user growth, but its stock price has wavered since the food-delivery company went public in April. In August, after peaking at $45.80, shares saw an 8% drop amid news the Chicago company planned to sell another 10 million shares in a secondary offering. They dipped below $35 at various points from October to December (not helped by Amazon’s foray into the meal-delivery space)—on par with its performance from the first week of trading.


Debut price: $9

Closing price as of February 20: $15.99

Gain/loss: +39%

S&P performance since IPO: +6%

Since going public in July, TubeMogul’s (TUBE) stock has only gone up, soaring from $9 at its debut to $19 in December. The video advertising company enjoyed a rally in late August when it reported strong earnings, sending shares up 13% to $13.82. Analysts are optimistic the stock could hit $25, with a median target of $21.

Debut price: $21.21

Closing price as of February 20: $7.99

Gain/loss: -67%

S&P performance since IPO: 15%

Talk about a letdown. At about $8 a share in December, the stock price of the babysitting marketplace (CRCM) is a far cry from February’s, when it hit a high of $29.25. Analysts have downgraded the outlook of its stock after a number of warning signs: disappointing earnings, accelerated spending, and slowing growth.

Debut price: $27.15

Closing price as of February 20: $10

Gain/loss: -66%

S&P performance since IPO: +12% (COUP), a Web 2.0 startup that went public 16 years after its founding, saw great enthusiasm on its first day of trading, popping 100% at one point before closing at $30. The stock has lost its luster since. Shares took a dive in June, when Goldman Sachs downgraded its outlook to sell—a move that speaks volumes because it is something investment firms, by nature of their line of work, are hesitant to do. Shares are floating around $15 currently.


Debut price: $9.70

Closing price as of February 20: $17.95

Gain/loss: +78%

S&P performance since IPO: +13%

TrueCar (TRUE), a car buying and selling platform, priced its IPO below expectations ($12 to $14) and debuted even lower at $9.70 a share. The stock peaked at $25 in September, but pushed a bit lower in anticipation of the lockup period expiring in November. Trading at about $22 in December, early investors have seen big returns, but analysts downgraded the stock, citing concerns about its business model and inflated valuation.


Debut price: $9

Closing price as of February 22: $15.03

Gain/loss: +49%

S&P performance since IPO: +12%

At the midway point of 2014, Chinese travel company Tuniu (TOUR), which went public on the Nasdaq in May, was considered the best performing tech IPO by Renaissance Capital for its 96% jump in share price. The picture at the end of the year, however, is very different. Down from its $24.99 peak, the company’s disappointing earnings and high spending have deterred investors, lowering the stock to about $12 at the end of the year.

Apple Moves Into the Dow Jones

Apr 2, 2015   //   by Profitly   //   Market, Profitly  //  Comments Off on Apple Moves Into the Dow Jones

Apple has officially made a move into the Dow Jones Industrial Average, replacing AT&T. So how will Apple impact expected earnings growth for the major index?

According to FactSet, the addition of Apple will reduce expected earnings declines of DJIA in 2015.

On March 18 after the close of trading, the Dow Jones Industrial Average will feature the addition of a new component. Apple will be added to the index, while AT&T will be removed from the index. In terms of earnings growth, If Apple had been added in Q4, how would earnings growth for the DJIA have been impacted? What is the expected impact of Apple on expected earnings growth for the DJIA going forward?

For Q4 2014, the DJIA reported a year-over-year decline in earnings of -4.2% (utilizing the same methodology used to calculate earnings growth for the S&P 500). For Q4 2014, Apple reported EPS growth of 48%. If Apple had been added to the DJIA (and AT&T removed) during Q4 2014, the DJIA would have reported earnings growth of 1.4%.

Looking ahead to 2015, the DJIA is projected to report year-over-year declines in earnings in Q1 2015 (-15.3%), Q2 2015 (-9.5%), and Q3 2015 (-5.9%), as both Exxon Mobil and Chevron are predicted to report significant declines in earnings in each of those quarters. For Q1 2015, Q2 2015, and Q3 2015, Apple is projected to report EPS growth of 27%, 30%, and 24%, respectively. Thus, the addition of Apple will reduce the expected earnings declines for the DJIA in each of these quarters, but it will not result in expected earnings growth for any of these quarters (as it would have in Q4 2014).

However, it is interesting to note that in Q4 2015 the addition of Apple is predicted to have little impact on the estimated earnings growth rate for the DJIA. For Q4 2015, the DJIA is projected to report yearover-year earnings growth of 1.9%. Apple is predicted to report EPS growth of 3.5% for the same quarter. As a result of the lower expected EPS growth rate for Apple in the fourth quarter of this year, the addition of Apple is expected to have little impact on the projected earnings growth rate for the DJIA in Q4 2015.


How Did Industry Analysts React to Announcement of New Apple Products?

Apple was a focus company for the markets in recent weeks leading up to the unveiling of several new products and services this past Monday, including new details regarding Apple Watch, a new Mac-Book, the release of ResearchKit software, and the availability of HBO NOW on Apple products. Given these announcements, have analysts revised their outlook for Apple over the past week? Have there been any significant changes to EPS estimates, ratings, or target prices over the past week?

In terms of EPS expectations, analysts did increase EPS estimates for fiscal year 2015 and fiscal year 2016 slightly over the past week. The mean EPS estimate for FY 2015 has increased by 0.6% during this time frame (to $8.60 today from $8.55 on March 6). The mean EPS estimate for FY 2016 has increased by 0.7% over this period (to $9.24 today from $9.17 on March 6).

In terms of ratings, there was no change in the opinions of analysts over the past week. The overall number of Buy ratings (38), Hold ratings (11), and Sell ratings (2) remained unchanged.

In terms of target prices, analysts did increase their target prices slightly. The mean target price for Apple increased 1.1% during the past week (to $137.27 today from $135.75 on March 6). The current mean target price of $137.27 is 10.3% above the March 12 closing price of $124.45.

It is interesting to note that the market reaction to the announcements appeared to be mixed. The price of the stock rose 0.4% (to $127.14 on March 9 from $126.60 on March 6) on the day of the announcement. However, the price of the stock is down more than 2% overall (to $123.59 on Friday from $126.60 on March 6) during the week of March 9.


Will Bulls Reign In 2015?

Feb 19, 2015   //   by Profitly   //   Market, Profitly, Risks  //  Comments Off on Will Bulls Reign In 2015?

People will often ask our gurus what their general outlook for the market is the following year and 2015 is no different. What we want everyone to know is that for us, it doesn’t matter if the market goes up or down. We train our students to know how to trade in any market. There will always be weeks where there are more plays then others, but the general direction of the market does not have a large impact on their ability to make money. They know how to short stocks and buy stocks by just learning technical patterns and the impact of various news stories.

If you are still curious how the market s going to do in the following year though, here is a post form Business Insider that will give you some insight. Please do keep in mind that making these types of predictions is like rolling a dice. New events can quickly pop up throughout the year and turn these estimates on their heads.

Finally, A Top Wall Street Strategist Goes Contrarian And Predicts US Stocks Will Fall In 2015

Until now, we couldn’t find a single major Wall Street strategist that was predicting US stocks would fall in 2015, and neither could Barron’s:


The lowest level on Barron’s list was 2100 by Jonathan Glionna of Barclays. Keep in mind that the S&P 500 closed on December 31, 2014, at 2,058.90, so these are all higher than that level.

Of the strategists followed by Business Insider, 2100 was also the lowest, with the most bearish coming from Goldman Sachs, Credit Suisse, and Barclays.

But Societe Generale has come out with a contrarian view: US stocks are going to slide in 2015.

“Since 1875, we have never seen the S&P rise for seven calendar years in a row, so an eighth year would seem highly unlikely,” Societe Generale’s Roland Kaloyan said in a Dec. 17 note to clients. “We assume that the S&P 500 will finish the year slightly down as the strengthening of the US dollar and the new tightening cycle offset the strong US GDP growth already priced-in at the start of the year.”

@finansakrobat tweeted this map summarizing the firms outlook for global stocks in 2015.

The red map of the US with “S&P 500: -1%” really sticks out.


Via Societe Generale


However, Kaloyan is feeling positive about other countries in Asia and Europe.

The firm is expecting stocks soaring in Hong Kong, Japan, Taiwan, and several European countries including Spain.

Think Twice Before Trading Currencies

Jan 20, 2015   //   by Profitly   //   Market, News, Profitly  //  Comments Off on Think Twice Before Trading Currencies

So you want to trade currencies? A lot of people have tried to take up currency trading as a way to boost returns with interest rates so low and the stock market near record territory. A lot of these same people got absolutely crushed last week in a central bank shocker. Even financial titans like Deutsche Bank, Barclays, and others like FXCM saw massive losses. So, you may want to think twice before diving in to this volatile market.

Speaking of FXCM, the stock is getting crushed, falling more than 80%. What exactly is FXCM? It’s a currency-trading platform for mom-and-pop investors, and on Thursday they revealed that their clients had taken a massive hit when the Swiss central bank surprised the world and abandoned its efforts to create a ceiling for its currency. There are a few things to keep in mind here. First, note that they are mom and pop investors rather than sophisticated traders. Secondly, according to the Wall Street Journal, about two-third of FXCM’s U.S. clients lose money each quarter. In last year’s third quarter, the most recent available, 68% of the firm’s active U.S. accounts were unprofitable.

Does this mean that FXCM just has really dumb clients? No, it means that trading currencies is hard. The two-thirds figure holds true across much of the industry. Among six of the biggest firms that allow U.S. retail traders to play in the currency market, a weighted average of 38.3% were profitable, according to Forex Magnates. In other words, more than six in ten were unprofitable.

Here’s the third-quarter 2014 data from Forex Magnates in chart form:



It’s the smallest and the newest investors that are most likely to lose money. It is safe to assume that this is likely because they are the less experienced and haven’t had  a change to burn out yet. The firms with the highest percentage of profitable accounts, Interactive Brokers and CitiFX, have minimum deposit requirements of $10,000. For some of the others, the minimum is much lower–as little as $50. The average account in the U.S. has about $6,000 to $7,000 on deposit, according to industry research.

Even with just a few hundred dollars in an account, the forex firms allow their customers to employ leverage to increase the size of their bets. A $1,000 account can make a $50,000 trade. But that also creates a problem: it’s easier to wash out entirely. So the would-be traders that come in, set up an account, lose all their money and never return–all in the span of a single quarter–are only counted as “unprofitable accounts” once.

Still want to trade currencies? Then learn from these Business Insider posts below.

More than three years of stability between the euro and Swiss franc just ended suddenly, as the Swiss central bank abandoned attempts to cap the currency’s value.

The bank previously aimed to let the franc rise no higher than 1.20 to the euro (about €0.83 to each franc). As soon as the change was announced, it smashed immediately higher, breaking through the previous “ceiling”. It broke through a 1:1 exchange rate, surging above €1.10.

Here’s the euro plunging against the franc, down by nearly 28% as the news broke, an astonishing move for a currency:

swiss franc.png

Moves like these occasionally come from countries like Russia, where a drop in a commodity they produce tanks, but they’re almost unheard of in the major advanced economies. As of 1:00 p.m. GMT (8:00 a.m. ET), the euro is down by more like 14.6%, to just 1.026 Swiss francs.

Switzerland brought the currency cap in 2011, to put a halt to the constant appreciation of its currency. The franc is seen as a particularly strong and safe currency, and saw huge inflows during the worst years of the euro crisis.

This is likely to have a big impact on a lot of Europeans: For example, if you’ve got a mortgage denominated in Swiss francs, but you get paid in euros, it just got a lot more expensive. On the other hand, if you’re getting paid in Swiss francs, that holiday to Italy suddenly looks a lot cheaper.

According to the Swiss National Bank’s statement, it was just becoming too difficult to justify the currency ceiling:

The euro has depreciated considerably against the US dollar and this, in turn, has caused the Swiss franc to weaken against the US dollar.

In these circumstances, the SNB concluded that enforcing and maintaining the minimum exchange rate for the Swiss franc against the euro is no longer justified.

As the dust settled from Thursday’s surprise decision to unpeg the Swiss franc from the euro — which blasted the franc up higher — we’re beginning to see the damage that was done.

According to the Wall Street Journal, Detusche Bank lost $150 million on the move. The Journal also reported that Barclays lost tens of millions.

It was expected that smaller businesses would feel the pain of this sudden, volatile shift. Business Insider’s Mike Bird reported that UK-based FX broker Alpari just announced that is has entered insolvency.

From Alpari’s announcement:

The recent move on the Swiss franc caused by the Swiss National Bank’s unexpected policy reversal of capping the Swiss franc against the euro has resulted in exceptional volatility and extreme lack of liquidity. This has resulted in the majority of clients sustaining losses which has exceeded their account equity. Where a client cannot cover this loss, it is passed on to us. This has forced Alpari (UK) Limited to confirm today, 16/01/15, that it has entered into insolvency.

Casualties continued to roll in. Foreign-exchange brokers who had relied on the stability of the Swiss franc, which until Wednesday was pegged to the euro, were taken by surprise when the Swiss National Bank abolished its controls, and millions of dollars were lost at firms around the world.

The UK-based FX broker Alpari just announced it had entered insolvency. Here’s what it said:

The recent move on the Swiss franc caused by the Swiss National Bank’s unexpected policy reversal of capping the Swiss franc against the euro has resulted in exceptional volatility and extreme lack of liquidity. This has resulted in the majority of clients sustaining losses which has exceeded their account equity. Where a client cannot cover this loss, it is passed on to us. This has forced Alpari (UK) Limited to confirm today, 16/01/15, that it has entered into insolvency.

That follows New Zealand’s Excel Markets, which made the same statement earlier, according to the Financial Times.

Brokers can go out of business on big moves like this because they give their clients access to leverage. For example, an account holder might have $1,000 with the broker but hold positions worth $10,000 in currency markets. That doesn’t matter so long as the holder’s losses are covered by the initial amount. But Wednesday, for at least two brokers, that wasn’t the case for a lot of those clients.

The New York-based FXCM, one of the world’s biggest foreign-exchange brokers, says it may be in breach of rules on capital requirements and that it is owed $225 million by clients who are now in negative equity. FXCM shares are down by an astonishing 90% ahead of the US open.

IG Group, a publicly listed UK-based broker said Thursday that its losses would not exceed £30 million ($45.7 million).

This isn’t likely to be the last of the fallout from the colossal move, which was almost unheard of among the most widely traded currencies of advanced economies. Here’s what Thursday’s fluctuation looked like:

swiss franc 2

Just like Tim and the other gurus teach you how to trade penny stocks and follow chart patterns, reach SEC filings, etc…you need to learn the fundamentals of currency trading before even thinking about diving into that market.  If these professional Wall Street firms (we use the word professional loosely there) are losing millions on this, think about how poorly the uneducated trader is doing.


Best Trades of 2014

Jan 8, 2015   //   by Profitly   //   Best Trades, Market, Profitly  //  Comments Off on Best Trades of 2014

The year is coming to a close, and it’s always great to look back at some of the best trades on Wall Street. Quartz did a great roundup that we are sharing here:

So that’s what we’re giving you in lieu of sweet, sweet returns.

1. Beef Lattes


Return on the left, underlying asset on the right.(AP Photo/Mike Groll)

That’s not a real thing. But severe droughts in Brazil and the western USdid cut down dramatically on the supply of both coffee and beef. And if you managed not to fall asleep during your Econ 101 lectures, you know that means prices go up! Which is exactly what happened.

Coffee prices spiked earlier this year, forcing chains like Starbucks andDunkin Donuts to pass the hike onto customers. Brazil got some rainthis fall, so the java jump is over. But the much of the American West—until this week, at least—is still a vast, arid expanse (paywall), so cattle herds are still small and prices are high enough to bring back cattle rustling.


2. Billionaire dollar store whimsy

Carl Icahn, corporate takeover specialist, speaks at the Reuters Corporate Reform Summit at the Reut..

Lend me your ear.(Reuters)

Carl Icahn is an activist investors, which means he buys big chunks of public companies, harangues them into making changes and profits on the resultant stock gains. He did just that earlier this year with Family Dollar, announcing in June a 9.4% stake in the low-cost retailer. He proposed that the company put itself up for sale, which it did. That turned into a bidding war between Dollar Tree and Dollar General. As of now, Family Dollar is sitting on an $8.5 billion offer from Dollar Tree, though the matter seems far from settled. But none of that matters for Icahn. His work done when the stock surged, he jumped out of the stock months ago for a reported gain of $200 million.


3. The Almighty Dollar


Might as well just use this stuff.(AP Photo/David Duprey)

The US is doing almost singularly wellamong developed economies. And so is the US dollar among major currencies. So investors are flocking into greenbacks to ride out the storm elsewhere.

As the Federal Reserve winds down its bond-buying program, the European Central Bank is attempting to get its own party started and the Bank of Japan is slamming open its own spigots, helping to make those currencies cheaper and driving the dollar to its most expensive level in five years. In many cases, a strong currency hurts economies because it makes exports more expensive. But it makes imports cheaper for American consumers, who are saving money on cheap gas anyway, so go ahead and buy that house you’ve been eyeing on Snapdeal already!


4. Old World Obligations


Betting against Mario was a poor decision.(Reuters/Ralph Orlowski)

Speaking of the ECB, foreign exchange traders aren’t the only ones trying to get in on the stimulus action. Bond investors have been bidding up European government debt in the hopes that the ECB (or some other investor) will take them off their hands later if Germany actually allows the whole thing to go through. To be sure, not all eurozone debt is the same (looking at you Greece), but it’s been a pretty broadly hot category this year.


5. Chinese Stocks


Thumbs and markets up.(REUTERS/China Daily)

The Shanghai Hong Kong Stock Connect, also known as the “Through Train,” has picked up a few passengers since it left the station last month. It was in the works for a while, but Chinese officials delayed its launchamid the Umbrella Movement protests in Hong Kong. This week’s minor meltdown notwithstanding, they still did pretty well for the year.


But it’s curious that a country’s stock market can be doing so well when its underlying economy seems to be going in the opposite direction. Where’s the money coming from? Like in so many other parts of the Chinese economy, the answer is leverage.

Here’s Quartz’s Gwynn Guildford to explain some of that dissonance:

But if leverage has been around for two years now, why are mainland-listed shares only now rallying? Because the Chinese government has been drumming up enthusiasm for stocks, including in its surprise launch of the Shanghai-Hong Kong Stock Connect—which, so far, has boosted A-shares minimally. It has also encouraged investment in its state-run press.

“The government may be hoping, by engineering a buoyant stock market through words and deeds, companies can raise equity (rather than debt) so the whole economy can de-leverage,” writes Cui, adding that a stock boom also should boost consumption by making people feel richer.



30 Stocks Traders Are Extremely Bearish On

Dec 19, 2014   //   by Profitly   //   Market, Profitly  //  Comments Off on 30 Stocks Traders Are Extremely Bearish On

Here at, we teach you how to go long and go short stocks. Going long is easier for people to understand. It’s when you buy a stock and hope for the price to go up. Shorting is a little bit trickier for people to wrap their heads around. It means you are selling a stock and hoping the price falls.

Here are 30 stocks traders are shorting like crazy, courtesy of Business Insider and data from FinViz. 

Shorting a stock can be a huge loss of its price goes up.

The major stock indices are up this year, with the Dow up nearly 8% year-to-date, and the S&P 500 up 12%.

But there are a number of stocks that traders have consistently shorted, or bet will fall.

We compiled a list of 30 stocks with market caps over $2 billion that investors are still betting against big time.

We ranked the stocks by percentage of shares outstanding held short, going from the least shorted to the most.

Ryman Hospitality Properties


Ticker: RHP

Short Interest: 24.67%

YTD return: 28.01%

Sector: Financial

Comment: Revenue in the third quarter increased 10.8% to $245 million. 

United States Steel


Ticker: X

Short Interest: 24.67%

YTD return: 6.13%

Sector: Basic Materials

Comment: On October 28, United Steel reported a third quarter net loss of $207 million in the fourth quarter.

 Burger King


Ticker: BKW

Short Interest: 25.03%

YTD return: 50.69%

Sector: Services

Comment: On November 9, Burger King opened its first restaurant in India, its 100th country of operation.



Ticker: ATHN

Short Interest: 25.21%

YTD return: -12.58%

Sector: Technology

Comment: Hedge fund manager David Einhorn told CNBC on October 21 that he’s short Athenahealth.



Ticker: ATHM

Short Interest: 25.64%

YTD return: 22.20%

Sector: Technology

Comment: Autohome’s profits jumped 64.6% year-over-year in the third quarter, at $88.8 million.

Caesars Entertainment


Ticker: CZR

Short Interest: 25.97%

YTD return: -25.81%

Sector: Resorts & Casinos

Comment: On November 26, Caesar’s gave a group of its bondholders a lien on potential proceeds from lawsuits.



Ticker: SUNE

Short Interest: 26.18%

YTD return: 58.16%

Sector: Technology

Comment: SunEdison announced November 17 that it will acquire First Wind for $2.4 billion, making it the largest renewable energy development in the country.



Short Interest: 26.57%

YTD return: 15.46%

Sector: Services

Comment: Cablevision’s net revenues rose 3.7% in the third quarter to $1.626 billion, after it increased subscription rates.



Ticker: WB

Short Interest: 27.84%

YTD return: -14.72%

Sector: Technology

Comment: Weibo shares rose in after-hours trading November 13 after the Chinese microblogging site raised its fourth-quarter revenue forecast in the earnings announcement. Profits rose 58% year-on-year to $84.1 million in the third quarter.

Restoration Hardware


Ticker: RH

Short Interest: 29.88%

YTD return: 23.22%

Sector: Services

Comment: The home furnishings company is changing its small-format stores for larger ones and is expanding its offerings.

 Abercrombie & Fitch


Ticker: ANF

Short Interest: 29.96%

YTD return: -12.58%

Sector: Services

Comment: On November 21, the company announced that it will sign a franchise agreement with a Grupo AXO to launch in Mexico. 

AmTrust Financial Services


Ticker: AFSI

Short Interest: 30.66%

YTD return: 60.55%

Sector: Financial

Comment: AmTrust announced November 24 that it has entered an agreement, pending regulation, to acquire CorePointe Insurance Company for cash.



Ticker: BBRY

Short Interest: 31.79%

YTD return: 38.17%

Sector: Technology

Comment: The company is paying iPhone users up to $550 to trade in their devices for the new BlackBerry Passport.



Ticker: Z

Short Interest: 32.55%

YTD return: 37.33%

Sector: Financial

Comment: Zillow shares gained more than 6% on November 19 after hedge fund manager Michael Massara said the company’s market cap could reach $50 billion.



Ticker: MNKD

Short Interest: 32.59%

YTD return: 11.35%

Sector: Healthcare

Comment: MannKind’s net loss during the third quarter was $36.5 million, or $0.09 per share.

 Sanderson Farms


Ticker: SAFM

Short Interest: 33.06%

YTD return: 27.27%

Sector: Consumer Goods

Comment: Shares of the poultry producer tanked October 16 after it noted lower sales because fewer people were eating in casual dining restaurants.

 J.C. Penney


Ticker: JCP

Short Interest: 34.81%

YTD return: -19.23%

Sector: Services

Comment: Third quarter net income grew 62% year-on-year.

 3D Systems


Ticker: DDD

Short Interest: 35.08%

YTD return: -63.27%

Sector: Technology

Comment: On November 24, the company announced that it will acquire Cimatron Ltd. to expand its share of the growing 3D-printing market.



Ticker: HLF

Short Interest: 35.26%

YTD return: -45.91%

Sector: Consumer Goods

Comment: Bill Ackman continues his crusade against Herbalife with a belief that the company operates as a “pyramid scheme.” He’s betting the stock will fall to zero.



Ticker: GME

Short Interest: 35.83%

YTD return: -25.46%

Sector: Services

Comment: Cyber Monday savings will last the entire week of Cyber Monday at GameStop. It’s shares fell 5% on the news.



Ticker: ZU

Short Interest: 37.15%

YTD return: -34.61%

Sector: Services

Comment: Third quarter net sales jumped 72% year over year to $285.8 million.

Ubiquiti Networks


Ticker: UBNT

Short Interest: 38.36%

YTD return: -37.45%

Sector: Technology

Comment: Ubiquiti signed an agreement in October to distribute its broadband products in India.

SolarCity Corporation


Ticker: SCTY

Short Interest: 39.28%

YTD return: -10.05%

Sector: Technology

Comment: SolarCity’s contract with Walmart to provide solar power in up to 36 states over the next four years is expected to be a revenue boost.



Ticker: GPRO

Short Interest: 39.60%

Return Since IPO: 135.77%

Sector: Consumer Goods

Comment: GoPro plans to launch consumer drones next year.

Pilgrim’s Pride


Ticker: PPC

Short Interest: 41.89%

Return Since IPO: 108.31%

Sector: Consumer Goods

Comment: The company reported better-than-expected third quarter earnings, at 99 cents per share, compared to an expected 85 cents, and up from 62 cents in the same period a year ago.

Jumei International


Ticker: JMEI

Short Interest: 42.10%

Return Since IPO: -31.97%

Sector: Services

Comment: The beauty products retailer based in China announced a partnership with Givenchy and beefed up anti-counterfeit measures in October.

Myriad Genetics


Ticker: MYGN

Short Interest: 44.74%

Return Since IPO: 58.53%

Sector: Services

Comment: Myriad is 16th on Forbes’ list of America’s best small companies.


Ticker: JD

Short Interest: 50.56%

Return Since IPO: 14.40%

Sector: Technology

Comment: China’s largest online direct sales company announced a secondary offering of an aggregate of 26,003,171 American depository shares (ADS) December 3, each representing two class A shares. JD rose 3.99% on the news.


Ticker: WUBA

Short Interest: 53.29%

Return Since IPO: 24.60%

Sector: Technology

Comment: Shares of the Chinese classifieds website climbed 11% on November 12 after it reported earnings that beat estimates, and forecast an up to 70% increase in fourth-quarter revenue.

Cheetah Mobile


Ticker: CMCM

Short Interest: 56.54%

Return Since IPO: 19.65%

Sector: Technology

Comment: Third quarter revenues increased 158.1% year-over-year to $78 million.


How low can oil go?

Nov 25, 2014   //   by Profitly   //   Market, Profitly  //  Comments Off on How low can oil go?


There has been no shortage of oil headlines recently, and for good reason. Prices have dropped to their lowest levels in 4 years, and commuters are seeing a noticeable different when filling up their cars at the gas station. We don’t focus on macro trends at, but that doesn’t mean we don’t look at them at all. When something as big as this happens, you have to pay attention.

Consider this, the average price of a gallon of gasoline is now about $2.90, the lowest since 2010, according to AAA. That’s down 78 cents from 2014’s $3.69 peak. With Americans spending roughly $1 billion a day on gasoline, several analysts and industry experts estimate that consumers will save roughly $8.4 billion in November and December, compared with the last two months of 2013, based on an average price for regular gasoline of about $2.89 a gallon as opposed to $3.23 last November and $3.26 last December. Just in time for the holiday shopping season. Retail sales were released last week and came in better than expected, increasing .3 percent vs analyst estimates of .2 precent. Walmart, which released third-quarter results Thursday, took note of the lower gas prices and credited them for a 0.5 percent gain in same-store sales. Analysts took note of the nation’s largest retailer’s results; that was their first quarterly sales gain since 2012. Some experts are predating gas prices could go as low as $2.79 by mid-December, again just in time for last minute holiday shopping. A survey released Friday by the National Association of Convenience Stores found 51 percent of men and 56 percent of those aged 18 to 34 say they are more likely to increase holiday spending.

The lower gas prices are also helping the average mood of consumers. Other data showed an improving jobs market and lower gasoline prices lifted consumer spirits in early November. The Thomson Reuters/University of Michigan sentiment index rose to 89.4, its highest level since July 2007.

The impact is especially significant for low- and middle-income Americans, who have been largely left behind by the slow economic recovery that began in 2009. Even as the job market has improved, most workers have received only modest wage increases. Median income remains roughly 5 percent below the peak it hit in 2007.

Take a look at this quote from a New York Times  story: “When oil prices fall, the benefit to consumers outweighs the loss to producers,” said Dean Maki, chief United States economist at Barclays. “Investment in oil and gas production is still less than 1 percent of gross domestic product. Consumer spending is 68.5 percent of G.D.P.”

Also from the Times is this: The typical American household buys 1,200 gallons annually, so if prices fall to the level Mr. Kloza predicts and stay there, that adds up to a yearly savings per household of at least $400. A 15 percent drop in the cost of home heating oil since last winter should also be helpful, especially as cold weather arrives in the Northeast. Barclays says this extra cash in wallets could help generate nearly half a percentage point in added economic growth in the fourth quarter, and roughly $70 billion more in consumer spending over the next year.

Analysts are all anxiously awaiting the next meeting out of OPEC, set for November 27. Many had believed the oil cartel would cut production much earlier, and this is their next chance to do so. That also lands on the Thanksgiving day holiday, so the thinly traded market could make for some wild swings, and that’s a big reason for even penny stock traders to watch it.

Other reasons that you should all be paying attention to this? The basic knowledge of staying up to date with what is going on in the economy and the rest of the world will help you in your trading. You get a sense of consumer’s moods, what events might trigger a big selloff, if there is more or less likelihood of earnings winners, and much more. Just because you aren’t trading Apple or Walmart doesn’t mean you can just ignore all of the big headlines.

It sounds like you’ll be paying attention to oil for awhile too. Listen to this: “We think lower gas prices in the U.S. are going to last for at least a year,” said Edward L. Morse, global head of commodities research at Citigroup told the New York Times. “Even if growth turns around globally, it would take two years of added demand around the world to move prices per barrel back to the mid-90s.”

Keep an eye on this story, it’s going to impact a lot of stocks in the weeks to come.

Profiting in a Bear Market

Nov 5, 2014   //   by Profitly   //   Market, Profitly  //  Comments Off on Profiting in a Bear Market


Give us an S&P500 down more than two percent last week and the Dow Jones once again wiping out all of its gains for the year, and you’re bound to get more people talking about the end of the bull market.

In his post titled, “Signs of a Bull Market Turning Bear,” Barry Ritholtz lays out some startling facts.

• This bull market is now more than 5 1/2 years old;

• The Standard & Poor’s 500 Index hasn’t had a 10 percent pullback since October 2011;

• Small-cap stocks as measured by the Russell 2000 have fallen below their 200-day moving average for the first time since November 2012;

• Almost half of Nasdaq stocks are down 20 percent from their one-year highs, meaning they are already in a bear market;

• U.S. markets are down 3 percent from all-time highs;

Thursday’s sell off was of particular concern. The Dow was down more than 300 points. To say the bulls are worried would be a fair statement. Ten of the past 12 trading sessions saw swings of 100 points or more in the DJIA.

Why the sudden volatility? Ebola, slowing global growth, a strong dollar, the end of quantitative easing, and the beginning of earnings season.

“The list of worries ranges from the strengthening dollar’s harm to U.S. earnings, the end of quantitative easing, Europe’s weakening economy and the International Monetary Fund’s reduced forecast for global growth. I am far less certain that those headlines are anything more than the excuses for the selloff, rather than the cause,” Riholtz says.

So how do you trade stocks from here? For those looking at the general market and not penny stocks, “one of the best ways to identify a market that is exhausted is to look for divergences between Breadth (i.e. the number of advancing equities versus the number of declining ones) and Price (i.e. new highs). That is a concept that Paul Desmond of Lowry Research has researched and written about many times over the years,” Ritholtz says.

He goes on to say that so far, each side in the bull-bear debate has been quick to declare victory. Doug Kass of Seabreeze Partners has been calling this “The Ali Blah Blah Top,” suggesting that the Chinese tech company’s monster initial public offering is a signal that markets have gotten too frothy. He notes that he won’t be initiating any new long positions “unless share prices drop meaningfully.”

He notes that the flip side of the argument comes from bulls such as Holland & Co. Chairman Michael Holland. He suggests that the easy part of the bull market, driven in part by the Federal Reserve, is ending: “The training wheels are coming off, the lack of volatility is ending, the ‘New Normal’ is ending, and the ‘True Normal’ is returning to markets.”

As penny stock traders know the best, things can turn quickly and you need to be ready to act at the drop of a hat. “What looks like a strong bull market on the surface, but with weak internals, can easily slip into a 10 percent correction,” Ritholtz says.

His ends by saying his belief is that 2014 may be a year of consolidation and digestion, as markets in 2013 got way ahead of both the economy and earnings.

Our gurus do pay attention to broader trends, but since they focus on specific stocks, they are able to make a profit in both bull and bear markets.

For instance, in the past 30 days, the DJIA is down about 3%, meaning if you would have invested $100,000 in the Dow one month ago, it would now be worth $97,000. On the other hand, Superman is up a whopping $404,016 in that time frame, Tim is up $60,092, and Investors Live is up $34,905.

It’s easy to tell where the money is to be made. Sure you have years like 2013 where the S&P500 is up more than 30%, but that is far from the norm. The 10-year average return for an S&P Index fund is just 7%, according to Morningstar.

Worst Investments of the Financial Crisis

Sep 23, 2014   //   by Profitly   //   Market, Profitly  //  Comments Off on Worst Investments of the Financial Crisis


We are constantly telling our students (and prospective students) that learning from your mistakes is one of the most important factors in becoming a better trader. You’re not going to get every trade right, and you will hardly ever (if ever) time a trade perfectly. None of our gurus are perfect yet they still make hundreds of thousands and sometimes millions of dollars in a given year. How? Because they limit their losses and learn from their mistakes.

So we thought it would be interesting to look back at some of the worst trades during the financial crisis. Below is a list that first appeared on CNBC.

The financial markets are littered with forecasters, most with either an outwardly bullish (optimistic) or bearish (pessimistic) bias. Most of them missed the financial crisis when it hit by being too bullish, and some have been too bearish since, worrying that another systemic collapse is around the corner when in fact equity markets, at least, continue to zoom to new highs.

Indeed, there have been some great calls and some awful ones over the past 25 years. Here are three trades that went bust:



1. “Whitney whiffs on munis.” Truth be told, Whitney was probably always overrated. Even during her heyday in the latter part of the aughts decade, Whitney was ranked 1,205th out of 1,919 equity analysts in 2007 and 919th out of 1,917 in the first half of 2008, according to Fortune. So all the fanfare over her market-calling ability almost seemed destined to end badly. And so it was that in late December 2010, she was featured on CBS’s “60 Minutes” and made the call heard round the fixed-income world: A prediction that 50 to 100 municipal bond defaults would cause “hundreds of billions” in losses that immediately moved markets but ultimately would be proven badly unfounded.

In fairness to Whitney, the muni space has not been without its high-profile defaults, but the situation has not approached her dire forecast. In her mostly overlooked 2013 book, “Fate of the States: The New Geography of American Prosperity,” Whitney only briefly mentioned the muni call, maintaining that the media overhyped her remarks. Despite the high profile she cultivated, Whitney also protested in the book that she didn’t like that her name had “become synonymous with doom and gloom.” Nowadays, her name is mostly synonymous with a very bad bonds call, and her public profile has dimmed significantly.



2. “Cohen: Crisis? What Crisis?” Face it, almost everybody on Wall Street missed the financial crisis. But you would be hard-pressed to find a major analyst at a major Wall Street shop caught more unaware than Abby Joseph Cohen, the Goldman Sachs chief strategist who still had her rally cap on well into 2008 as the market imploded. Cohen set an uberbullish 1,675 price target for the S&P 500 for that fateful year, not foreseeing that the world was crumbling before her eyes. The stock market index would close at 903.25, a 37 percent drop and 46 percent below Cohen’s target. That same year, Goldman replaced Cohen with David Kostin and moved her over to a position as “senior investment strategist.” Yet on Wall Street there’s always room for a second act: Cohen maintains a prominent role at Goldman and even was selected to go first at a recent high-profile question-and-answer session with Federal Reserve Chair Janet Yellen.



3. “Helicopter Ben’s “contained” crisis.” Most accounts of financial-crisis history no doubt will paint then-Federal Reserve Chairman Ben Bernanke as one of the central figures on the Committee to Save the World, as it was nicknamed. But it was also Bernanke’s seeming obliviousness to the dangers of subprime mortgages that helped stoke the debacle in the first place. In a speech given March 28, 2007, before the Joint Economic Committee, the central bank chief showed just how deep the denial ran over the coming crisis: “Although the turmoil in the subprime mortgage market has created severe financial problems for many individuals and families, the implications of these developments for the housing market as a whole are less clear,” he said. “At this juncture, however, the impact on the broader economy and financial markets of the problems in the subprime market seems likely to be contained. In particular, mortgages to prime borrowers and fixed-rate mortgages to all classes of borrowers continue to perform well, with low rates of delinquency.”

The statement would soon prove to be tragically shortsighted, though the Fed ultimately would join with the Treasury Department to devise trillions of dollars’ worth of alphabet-soup programs that bailed out the financial, insurance and auto industries, paving the way for a recovery—albeit grudgingly slow—that continues today.

Honorable mentions: “Dow 100,000” by 2020, according to the 1999 book by Charles W. Kadlec (yes, we know it’s not 2020 yet, but seriously?); Marc Faber, Schiff and all of the perma-bears (a group from which Roubini has only recently extricated himself) who have been fighting the market all the way up from its March 2009 lows; Whitney Tilson’s 2004 prediction that Google would be “highly disappointing” to investors.