Stocks Rebound From Bad Start As Retailers Show Strength

Stocks stumbled at the opening bell Thursday but quickly reversed en route to an up day. The Nasdaq added 0.6%, while the S&P 500 lagged with a 0.2% gain. The small-cap S&P 600 popped 1.2%, smoothing over the previous session’s 1% dent. The IBD 50 tacked on 0.3%. Volume ran higher on the Nasdaq but lower on the NYSE. While daily gains in the major indexes have been unremarkable so far this month, …

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Low Inflation Expectations Push Treasuries Higher

Treasuries rose, pushing yields on 30-year bonds to almost the lowest level this month, after a report showed that inflation remains below the Federal Reserve’s target even with the economy expanding and adding jobs.
The U.S. sale of $13 billion in in…

Procter & Gamble Rises On Earnings, Duracell Deal

Sleepy Procter & Gamble (NYSE:PG) has inched its way to an all-time high during the past month, powered by an earnings report Oct. 24 and news that it will sell its Duracell battery business.
Warren Buffett’s Berkshire Hathaway (NYSE:BRKA) is bu…

French Economy Contracts, China Economy Flattens, Markit

Global markets showed a modest reaction Thursday as researcher Markit released preliminary November purchasing managers indexes for China, Germany, France and the eurozone.

All are crucial economies right now, as the global economy fights to create even a slight sense of momentum.

The preliminary estimates, called Flash PMIs, reflect data collected between November 12 and 19 and are based on 85% to 90% of total survey responses for the month.

China’s major indexes ended narrowly mixed Thursday, leaving Hong Kong’s Hang Seng index down 3.2% thus far for the week and the Shanghai Composite down a fraction.

HSBC Bank’s Flash China PMI, compiled by Markit, shows manufacturing slowing, with the index at 50 in November, down from October’s 50.4. While factory output and purchases slipped from expansion to contraction and employment declines accelerated, manufacturers did report acceleration in new orders. Growth slowed in both new export orders and backlogs.

In Europe, France showed possibly the strongest response to the data. The Paris Stock Exchange’s benchmark Cac-40 index dropped 0.8% Thursday, leaving it up less than 0.1% so far for the week.

Overall economic activity in France contacted at a slower rate in November, with the Markit Flash PMI number improving to 48.4, from 48.2 in October. Manufacturing (46.5 in November) fared worse than services (48.8). The services sector posted its smallest decline in three months, while manufacturing posted its biggest drop since August.

In Germany, Europe’s largest economy and hardest hit by sanctions against Russia, the economy expanded for a 19th straight month in November, but growth slowed, leaving the PMI index at 52.1, down from October’s 53.9. The country’s services index slowed to 52.1, a 16-month low. Manufacturing marked a 2-month low at 51.4.

Employment continued to show resilience, expanding for a 13 th straight month but at its slowest rate in three months.

Frankfurt’s DAX index dipped in morning trade, but recouped its losses to end ahead 0.1%.

Total eurozone growth slowed to a 16-month low. Manufacturing flickered higher, but not much, while services sector growth marked its slowest expansion since last December.

Williams-Sonoma, Swift Break Out, Close Near Entries

Home-goods retailer Williams-Sonoma (WSM) gapped up to an 8% gain in huge volume Thursday, clearing a 75.79 buy point and touching an all-time high. The stock broke out from a 12-week cup-shaped base, but much of the base formed below its 10-week moving average, which is a flaw. Late Wednesday the company reported quarterly earnings and sales growth that topped analysts’ expectations. Earnings …

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How To Make Big Money When You’re Right On A Stock

IBD founder and Chairman William O’Neil teaches that one key to success in the stock market is not just to be right on a stock but also to make big money when you’re right.

Experienced investors know that when the dust settles after a rally, the lion’s share of your profits will be in one or two stocks. If you’re managing your portfolio correctly, then your path will have been littered with a few small losses, and you will have harvested some moderate gains along the way.

One way to make money when you’re right is to make sure you have a sizeable position when you start off. Some investors may buy large positions in a stock on which they have conviction, then take smaller positions in issues of which they are unsure.

Sometimes, however, the stocks that you are uncertain of are the ones that skyrocket. So take equal-sized positions. Decide how many positions you’re going to own, and divide your portfolio accordingly.

Don’t diversify too much by owning dozens of stocks. It’s too difficult to keep track of them. You’re less likely to water down your performance if you concentrate your positions in a few very promising issues.

An investor with $3,000 should limit himself or herself to two positions. A portfolio of $5,000 to $20,000 should have three stocks. For a $20,000 to $200,000 portfolio, own four or five equally weighted positions. Even an investor with more than $1 million should hold just six or seven names. If you’re uncomfortable with so few, you might consider 10 to 12, but not dozens.

Scale into the stock, making it prove its strength before you buy more. Buy half of the intended full position size at the exact buy point, another 30% of a full position after it advances 2% and the rest before the stock reaches 5% from the buy point.

If you realize that you might have a big winner on your hands, you can add small amounts at strategic moments, such as when your stock makes a three-weeks-tight pattern or successfully tests its 50-day or 10-week moving averages the first two times out of a base.

Keep the additions small. Adding 5% of your purchase price, or certainly no more than 10%, is acceptable. Keep an eagle eye on your average cost, and keep it close to your initial buy point. You might mark your average price with a line on a chart.

Stocks Narrow Losses After Data; Philly Fed Hits 21-Year High

Stocks opened in the hole Thursday, but trimmed losses and turned mixed quickly after existing-home sales and Philadelphia region manufacturing showed surprise gains.

The Nasdaq doffed early losses and climbed 0.1%. The S&P 500 narrowed its loss to 0.1% while the Dow Jones industrial average kept to a 0.3% decline.

Trade was weak, down a fraction on the Nasdaq and 12% lower on the NYSE.

The stock market today opened to mixed economic news. Consumer prices were flat for October, suggesting little pricing strength for producers and little momentum for the economy. But weakening energy prices were a big part of that weakness, with core prices — minus energy and food — showing a better-than-forecast 0.2% gain for the month.

Existing-home sales were more clearly positive, rising in October to an annualized rate of 5.26 million from September’s upwardly revised pace of 5.18 million, the National Association of Realtors said. The number surprised economists, who had projected a slowdown to a 5.15 million rate.

Mid-Atlantic region manufacturing, by comparison, knocked the ball out of the park. The Philadelphia Federal Reserve’s Manufacturing Business Outlook Survey spiked to 40.8 in November, almost double October’s 20.7 reading and neutering economists who had projected a slip to 18. It was the index’s highest reading since December 1993, and the number of firms reporting increased activity rose from 9% in October to 49%.

Retail stocks grabbed attention for a second straight day on a welter of quarterly reports. Kirkland’s (NASDAQ:KIRK) rocketed 11%. Williams-Sonoma (NYSE:WSM) spiked 9%. Best Buy (NYSE:BBY) surged 7%. Bon Ton Stores (NASDAQ:BONT) fell 6%.

Dollar Tree (NASDAQ:DLTR) rang up a 5% gain, reporting better-than-expected sales and earnings in the third quarter. The gain sent shares to a new high, up 6% for the week and working on a sixth straight weekly advance.

Keurig Green Mountain (NASDAQ:GMCR) tumbled 6% in early action. The single-cup coffee innovator delivered better-than-forecast fiscal fourth-quarter earnings, sales and margin performance, but investors felt its holiday season guidance left a little too much room for cream. The slip pulled the stock off a fresh high, threatening its first decline in five weeks but leaving the stock still above its 10-week moving average.

Other leaders were also off to a weak start, as more than 4-in-5 IBD 50 stocks slipped out of the starting gate. All the gains on the list were less than 1%. Autohome (NYSE:ATHM), Ambarella (NASDAQ:AMBA) and Vipshop (NYSE:VIPS) fell 3% each to lead the downside.

The slip caused little pain for Ambarella, which is still up almost 1% for the week and extended after a six-week advance.

Vipshop is down more than 10% for the week, but still holding above its 10-week line of support.

Autohome is slipping deeper below its 10-week moving average as it watches its three-month base-building effort fall to pieces.

Foreign Stock Funds: Volatility Comes With Gains

You wouldn’t know it by looking at this year’s returns, but the performances of the average emerging-market and foreign-stock mutual funds have run well ahead of the S&P 500′s in the past 15 years.

Investors in the average foreign-stock fund would have turned a $10,000 investment made on Sept. 30, 1999, into $25,277 by Nov. 18 of this year, according to Morningstar Inc. data. The same amount in the average emerging-market fund would have done a lot better, climbing to $38,654. The S&P 500 would have coughed up $21,299.

But unlike the S&P 500, a proxy for the broad U.S. stock market, foreign funds and their more-focused emerging-market cousins have had trouble surpassing the peaks they reached in 2007.

Matthews Pacific Tiger Investors has risen nearly 13% this year, nearly as much as the S&P 500. The $8.3 billion fund has risen an average annual 11.44% in the past 15 years vs. the S&P 500′s 4.42%. The fund has about 62% of its assets in emerging Asian stock markets and 36% in developed Asian markets.

Recent top holdings include South Korea-based cosmetics firm AmorePacific and Kotak Mahindra Bank of India.

Nasdaq, Small Caps Absorb Most Of Day’s Selling Heat

Small caps took a body blow. Big-cap techs got peppered with some jabs of selling. Yet Wednesday’s session showed light selling overall. A day of rest was warranted for the market. The Nasdaq, which has climbed as much as 14.4% from its mid-October low of 4116, gave back nearly 0.6% on Wednesday in slightly lighter volume vs. the prior session. The IBD 50 lost 0.4%. Light pullbacks are key to …

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Three New ETFs Go After Hackers And Volatility

What’s new in November?

Twelve exchange-traded funds that give investors a stake in investments ranging from cybersecurity firms to commodity futures. Here’s a close look at three that have hauled in $10 million or more apiece in under a month of trading in the stock market:

PureFunds ISE CyberSecurity (ARCA:HACK) launched Nov. 12 and has marshaled $25 million in assets so far. It invests in 30 hardware- and software-oriented cybersecurity companies, both infrastructure providers and service firms.

The fund has about 86% of its assets allocated to the U.S., 9% to Israel, 4% to Japan and 2% to the Netherlands.

HACK has a 0.75% expense ratio. The top five holdings include Vasco Data Security (NASDAQ:VDSI),Imperva (NYSE:IMPV), Qualsys (NASDAQ:QLYS), Palo Alto Networks (NYSE:PANW) and Splunk (NASDAQ:SPLK).

“HACK’s unique portfolio offers exposure to companies that are virtually unowned by broad-based technology ETFs,” said Christian Magoon of Magoon Capital, a consultant on the new product.

The cybersecurity market has made headlines for the wrong reasons lately (cue data breaches at big banks and big-box retailers). But this niche ETF affords investors an opportunity to tactically play a segment that some see as increasingly important. Somewhat-related peers include First Trust ISE Cloud Computing Index Fund (NASDAQ:SKYY) and Nasdaq Internet Portfolio (NASDAQ:PNQI), both of which are slightly cheaper to own, with expense ratios of 0.60%.

HACK entails some concentration risk — its top 10 stocks account for 58% of portfolio weighting.

Cambria Global Momentum (ARCA:GMOM) is a portfolio of diversified asset classes. That means domestic and foreign stocks, bonds, real estate, commodities and currencies. A fund of funds, GMOM shifts from one asset class to another based on volatility conditions and market cycles.

As such, it differs from equity-focused ETFs such as PowerShares DWA Momentum (ARCA:PDP) and iShares MSCI USA Momentum Factor (ARCA:MTUM). Both try to beat a broad benchmark index by holding stocks displaying higher momentum characteristics.

GMOM seeks to protect investors from emotional decision-making, said fund manager Meb Faber. He selects the 17 holdings out of a universe of roughly 50 ETFs.

“The fund attempts to achieve better than equity-like returns, while still having strict risk control methods,” Faber said.

Since its Nov. 4 launch, GMOM has gathered $17.6 million in assets. As an actively managed fund, it has a relatively high 0.94% expense ratio. By comparison, PDP and MTUM cost 0.65% and 0.15% in fees respectively.

PowerShares DB Optimum Yield Diversified Commodity Strategy () listed Nov. 7 and has picked up $9.9 million since.

Another actively managed ETF, PDBC invests in 14 heavily traded commodity futures across the energy, precious metals, industrial metals and agriculture sectors.

“Broad-based commodity exposure like PDBC may help diversify a portfolio’s returns and improve investors’ overall risk-adjusted returns,” said Lorraine Wang, global head of ETF research for Invesco PowerShares.

PDBC expands PowerShares smart beta portfolios to a total of 82. It has a 0.59% expense ratio — less than peers such as PowerShares DB Commodity Index (ARCA:DBC) and iShares GSCI Commodity-Indexed Trust (ARCA:GSG).