Tag Archives: nyse

T-Mobile Hovers Near Buy Point; AT&T Builds Possible Base

Providers of wireless telecom services climbed sharply in the industry rankings since the start of March. As a group, the industry gained 33% off a January low. It ranked No. 5 among IBD’s 197 industry groups on Thursday, up from No. 109 eight weeks ago. The primary drivers for that growth included thinly traded players Straight Path Communications ( STRP ) and Shenandoah Telecommunications ( SHEN ). Straight Path is up a blinding 400% since November. Shenandoah lodged a 57% advance off a January low. At the heavy end of the group are Sprint ( S ) and T-Mobile U.S. ( TMUS ). Sprint shares had a nice run off a late-January low through early March, but has since been stalled by resistance at its 40-week moving average. Earnings-wise, Sprint hasn’t turned a profitable quarter for at least a half decade. Get a broad look at AT&T and T-Mobile stock characteristics at IBD’s Stock Checkup. T-Mobile is a different case. The stock has a lot of negatives: a long, messy consolidation. A weak Relative Strength rating and a dicey quarterly report card when it comes to EPS and revenue growth. But consensus forecasts project a 59% earnings gain this year. That would mark the company’s third straight year of accelerating EPS growth. Forecasts project a 12% revenue gain — below increases of 24% and 21% in 2013 and 2014, respectively, but better than last year’s 8% gain. The company has earned an increasing following with their unlimited data plans at relatively low cost. Network coverage seems to be a steady complaint, but subscribers often put up and stay in because the rates are so good. T-Mobile posted a solid Q1 earnings beat on April 26. Equally important was its increase in subscriber growth. T-Mobile added 877,000 in postpaid customers for the quarter. Verizon Communications ( VZ ) reported a decrease of 8,000. AT&T ( T ) saw 363,000 customers jump ship. While taking market share, T-Mobile is also jockeying to make its network coverage more competitive. The company plans to spend $10 billion at a pending auction of bandwidth from local television providers.  The result could disproportionately benefit T-Mobile, according to a recent note from Goldman Sachs , which is looking to shore up its thin, low-band position. The company’s build out of its low-band (700 MHz range) spectrum has currently reached 28 of the top 30 metropolitan areas. As a side note, German wireless provider Deutsche Telekom ( DTEGY ) owns about two-thirds of T-Mobile. Stir that together with the earnings forecast and it makes a somewhat compelling case for the stock. The stock’s chart also bears watching. An upshift in accumulation by institutional investors in the past two months lifted the stock’s Accumulation/Distribution to a solid B rating. Shares are hovering just below a 40.06 cup-with-handle buy point. They cleared that mark briefly for four days in April. They since have held steady, just above their converged 10- and 40-week moving averages. In the super-heavyweight category, AT&T is set to cap the fifth week of a shallow consolidation. If shares hold their place through Friday, the chart would present a flat base with a 39.82 buy point. A 19% run-up in January through April lifted the stock’s RS rating to a passing grade of 84. Its Accumulation/Distribution rating hovers at an acceptable B-.

What Pushed Up These Agricultural ETFs?

Finally, soft commodities are catching up with the hard commodities this year. Several hard commodities including precious metals have made a comeback this year, but soft commodities could not keep pace with them. A stronger dollar, weak global fundamentals that are impacting the demand profile and ample supplies marred agricultural commodity investing. However, many agro-based commodities and the related ETFs have staged a recovery lately. A favorable demand-supply scenario is the major driver of this. Below, we highlight three agricultural ETFs that saw decent gains in the last one month (as of April 26, 2016) and see if the gains can last: Cocoa Cocoa prices have exhibited a wining trend lately due to supply concerns. Worries about lower yield in the mid-crop season in the key growing region of Ivory Coast led to this rise in prices. A long-drawn-out dry weather actually hit crop production. In addition, the demand scenario is also shaping up with cocoa grinding – a key gauge of cocoa demand – in Asia rising 2.9% in the first quarter of 2016. The data came in better than analysts’ expectation of a 1% rise. The double tailwinds put the cocoa market in an upward trajectory and showered gains on cocoa ETFs like the iPath Dow Jones-UBS Cocoa Total Return Sub-Index ETN (NYSEARCA: NIB ) and the iPath Pure Beta Cocoa ETN (NYSEARCA: CHOC ). Cotton Global cotton prices took a beating earlier after talks about China – one of the key growing regions of cotton – preparing to sell some of its 11 million-metric-ton cotton hoard, which is a massive chunk and enough to roil global cotton prices, per Wall Street Journal . Notably, China accounts for about 60% of the world’s cotton inventory. But the ” delay in sales of its giant state cotton reserves” by China kept supplies at check and pushed up prices. Also, raw cotton deliveries to Indian mills have declined 12% this season, giving signs of lesser production. This scenario has boosted cotton exchange-traded products like the iPath Pure Beta Cotton ETN (NYSEARCA: CTNN ) and the iPath Dow Jones-UBS Cotton Total Return Sub-Index ETN (NYSEARCA: BAL ) . Sugar Sugar prices have also recovered lately on ‘ global deficit’ concerns . As per sources, research agencies have predicted a shortfall in supplies globally for the current season that will end in September 2016 (read: Sugar ETFs Hit 52-Week Highs: Time for Sweet Returns? ). Going by a recent Wall Street Journal article, “Brazil, India and Thailand – three of the world’s top producers – are showing ongoing signs of production risk.” Inadequate moisture in these top growing counties spoiled output, especially in Asia. All these led to a reduced number of sugar-cane estimates that spurred deficit concerns and boosted the price (read: Can El Nino Boost Agricultural ETFs? ). The Teucrium Sugar Fund (NYSEARCA: CANE ) and the i Path Pure Beta Sugar ETN (NYSEARCA: SGAR ) were the major beneficiaries of this trend. Bottom Line Having said this, we would like to note that we, at Zacks, are not positive on agricultural ETFs over the medium term. Though the products have gained lately, we expect the trend to lose momentum as the latest drivers are short-lived in nature. Link to the original post on Zacks.com

Are You Considering ‘Sell In May, Go Away?’

One of the signs that a stock market may be transitioning from a bull to a bear? Participants dismiss exorbitant valuations , cast aside disturbing shifts in technical trends, disregard economic stagnation and scoff at historical comparisons. For instance, it has been 352 days since the Dow Jones Industrials Average registered an all-time record high in May of 2015. Since the 1920s, when the Dow has surpassed 350 calendar days without recovering a bull market peak, the index has dropped at least 17% on nine out of 11 occasions. On average, the Dow has succumbed to 30% bearish price depreciation. Adding insult to injury here is that the Dow has failed to hold 18000 since it first notched the milestone back on December 23, 2014. That was 499 days ago. Equally compelling? Five days earlier (12/18/2014) marked the Federal Reserve’s final asset purchase in its third round of quantitative easing (QE3). In other words, the stock market has been unable to make any meaningful progress since the Fed stopped expanding its balance sheet. (Note: This also lends credence to research that attributes 93% of the current bull market’s gains to the Fed’s electronic credit/asset purchase interventions). “Forget corporate earnings, sales, the global economy, technical analysis and history, Gary. You’ve got to be a contrarian here because this is the most hated stock market ever!” I’ve heard this claim dozens of times now. Ostensibly, a lack of excitement for stock assets should push stocks back to record heights and beyond. And there may be some truth to the declaration. After all, corporations have been the only “net buyers” for more than three months, as the other participants (e.g., pensions, hedge funds, “Mom-n-Pop” retail, institutional advisers, etc.) have been “net sellers.” On the other hand, according to the National Association of Active Investment Managers, investment sentiment sits at its highest level since April of 2015. Putting that into perspective? A contrarian who recognized the uber-bullishness last year may have exited the market near the all-time record highs for the Dow and the S&P 500 in May of 2015. Similarly, we may once again be at a point where bullishness is overextended. Granted, the S&P 500 might only need to rise 4% from current levels to register an all-time record. In and of itself, that is relatively impressive. Nevertheless, the year over year and year-to-date outperformance of the S&P 500 by the FTSE Multi-Asset Stock Hedge Index (affectionately known as “MASH”) is reason enough to be wary. We’re talking about the collective success of several key components like the SPDR Gold Trust ETF (NYSEARCA: GLD ), the CurrencyShares Japanese Yen Trust ETF (NYSEARCA: FXY ), the PIMCO 25+ Year Zero Coupon U.S. Treasury Index ETF (NYSEARCA: ZROZ ) and the iShares National AMT-Free Muni Bond ETF (NYSEARCA: MUB ). Click to enlarge Click to enlarge Three-quarters of S&P 500 corporations have reported Q1 2016 earnings. And according to the S&P Dow Jones Indices website, as reported earnings estimates for the S&P 500 (3/31/2016) are now $87.48. The trailing twelve-month P/E? 23.4. “In the era of ultra-low interest rates,” you insist, “it simply doesn’t matter.” Well, then, perhaps you should investigate the four bear markets that occurred in the 20-year period (1936-1955) when the U.S. had similar 10-year yields, yet price-to-earnings ratios that were half what they are right now. Here is one thing that should not be ignored. When precious metals like gold and carry-trade currencies like the yen outperform stocks over 5-6 months as well as one year – when long-maturity U.S. treasuries and Japanese government bonds are behaving in a similar fashion – “risk off” has the edge over “risk on.” Should you sell in May and go away, then? From my vantage point, just make sure you’ve got a comfortable cash/cash equivalent cushion to buy riskier assets at more attractive valuations down the road. Disclosure: Gary Gordon, MS, CFP is the president of Pacific Park Financial, Inc., a Registered Investment Adviser with the SEC. Gary Gordon, Pacific Park Financial, Inc, and/or its clients may hold positions in the ETFs, mutual funds, and/or any investment asset mentioned above. The commentary does not constitute individualized investment advice. The opinions offered herein are not personalized recommendations to buy, sell or hold securities. At times, issuers of exchange-traded products compensate Pacific Park Financial, Inc. or its subsidiaries for advertising at the ETF Expert web site. ETF Expert content is created independently of any advertising relationships.