Thursday, January 29, 2015

CROX – Crocs Stock is Totally Out of Fashion

Facebook Logo Twitter Logo RSS Logo Louis Navellier Popular Posts: Ring in the New Year Right – 3 Best Booze Stocks to Buy Now6 New Year's Resolutions for Investors3 ‘Best of the Best’ Stock Picks for 2014 Recent Posts: CROX – Crocs Stock is Totally Out of Fashion 62 Mid-Cap Stock Resolutions for the New Year 2 Insurance Stocks to Keep Your Portfolio Covered View All Posts

Welcome to the Stock of the Day.

crocs_185x185It has been a long time since Crocs  (CROX) was fashionable—both with its clunky shoes on Main Street and with its clunky shares on Wall Street.

But now that the company has attracted a sizeable investment from Blackstone (BX) and is on the cusp of a major executive shakeup, could Crocs stock fortunes change in 2014? Find out now.

Company Overview

Crocs  may just produce the most unique shoes on the market. The company has patented its own material, Croslite, which is featured in all Crocs brand shoes. What makes Croslite different is that it is comfortable, lightweight, odor-resistant and with a superior grip.

Crocs used to be notorious for their clunky style, but the footwear giant has been revamping its brand. The company has also embraced its roots as prime nurse-wear and now provides products for hospital, restaurant, hotel and other hospitality markets.

Word on the Street

CEO John McCarvel just announced his retirement and Blackstone announced that it is investing $200 million in the footwear company. The company plans to put that $200 million towards stock buyback programs—increasing its current share repurchase program to $350 million. Investors also cheered the ouster of McCarvel, who had been seen as a roadblock to success—particularly in closing underperforming stores and limiting addition store openings.

Is this enough to revise my sell-recommendation for Crocks stock?

Earnings Outlook

In this case, I’m going to let sales and earnings speak for themselves. This time last year, Crocs  posted earnings of 4 cents per share for the fourth quarter. As meager as that is, that’s still light-years ahead of where analysts expect the company to be for Q4 2013.

Right now, Crocs  is expected to post a loss of 21 cents per share and $222.25 million in sales—below the $224.99 million brought in the year ago quarter. Over the past 60 days the analyst community has slashed its consensus EPS estimate for the fourth quarter (from -3 cents to -20 cents per share), by 8% for the first quarter and by 16% for next year. So despite what Blackstone may be up to, it’s going to take Crocs a long time to turn itself around.

Current Ratings:

Before you buy any stock, you should always run it through my free Portfolio Grader ratings system. 2013 has not been a good year for Crocs stock—it’s been at a sell for the past 12 months running. And it doesn’t look like 2014 will be much better. Buying pressure could hardly be lower, so CROX receives an F for its Quantitative Grade.

On the fundamentals side, there is a lot of room for improvement: The company earns a D for its Fundamental Grade. That’s because of the eight metrics I graded it on, Crocs outright fails on six of them (sales growth, operating margin growth, earnings growth, earnings momentum, earnings surprises and analyst earnings revisions).Only return on equity (B) and cash flow (A) receive solid marks.

Bottom Line: As of this posting I consider CROX an F-rated Sell.

Sound Off: What do you think about CROX? Are you a buyer at current prices? Let me know what you think by posting on our wall on Facebook. For more stock grades and commentary, please visit NavellierGrowth.com!

Wednesday, January 28, 2015

McDonald’s slammed over Ronald McDonald House g…

McDonald's is basically a minor financial supporter of its own Ronald McDonald House Charities and should immediately stop linking long-time spokes-character Ronald McDonald with it, says a consumer advocacy group in a scathing report out today.

The 30-page report, funded by Corporate Accountability International and The Small Planet Fund, charges that McDonald's is mostly using the charity as a branding device for its food sales because the corporation, itself, contributes so little to the charity. While McDonald's reaps 100% of the "branded benefit" from the charity, it only contributes about 20% of the money, the report charges.

"McDonald's giving does not match its rhetoric," says Michele Simon, a public health lawyer who authored the report dubbed "Clowning Around with Charity: How McDonald's Exploits Philanthropy and Targets Children."

The report does not accuse McDonald's of doing anything illegal with its namesake charity. The issues it highlights are ethical. Among the report's recommendations: McDonald's should rename Ronald McDonald House Charities and junk Ronald McDonald as a spokesman.

McDonald's has no such plans. And McDonald's officials blast the report's findings.

"McDonald's categorically rejects this self-serving and biased document and stands proud of the significant financial support and volunteer hours we have and will continue to provide to Ronald McDonald House Charities and other charities worldwide," says Bridget Coffing, senior vice president of corporate relations, in a statement.

By linking Ronald McDonald, in particular, to the charity, "McDonald's gains an emotionally-loaded marketing vehicle while shielding itself from critics," the report concludes.

Simon says that McDonald's contributes between $5.3 and $10 million to its name-sake, global charity, according to publicly available data that the advocacy group reviewed.

Even then, the report is extra careful not to criticize what the charity, itself, does -- which is p! roviding housing for parents of children who are hospitalized with serious illnesses. The report calls the charity "vitally important."

Globally, Ronald McDonald House Charities gets less than one-quarter of its revenue from McDonald', the report says. And at the local level, the regional chapters and local Ronald McDonald Houses often get as little as one-tenth of their revenue from McDonald's.

Even McDonald's customers, the report charges, contribute as much as 1.5 times more to the charity than does McDonald's itself.

"Most people think that McDonald's funds Ronald McDonald House Charities 100%," says Simon. "This is a disconnect between what most people think and reality."

On its web site, for example, The Los Angeles Ronald McDonald House, which is one of the nation's largest with 75 rooms, notes, "although our House shares a brand name with McDonald's Corporation, less than 10% of our annual $2 million budget comes as a result of financial contributions from the company's local owner / operators."

But McDonald's executives scoff at the report.

"This 'report' is shameful and misleading. We hesitate to even dignify it with a comment, but that would be a disservice to the McDonald's employees, franchisees, suppliers and customers who have partnered tirelessly to support the tremendous work of Ronald McDonald House Charities," says Coffing, in her statement. "This is a thinly-veiled attack on our brand at the expense of the millions of families and organizations who have benefitted from Ronald McDonald House Charities."


2 Stocks Spiking on Unusual Volume

DELAFIELD, Wis. (Stockpickr) -- Professional traders running mutual funds and hedge funds don't just look at a stock's price moves; they also track big changes in volume activity. Often when above-average volume moves into an equity, it precedes a large spike in volatility.

>>5 Big Stocks to Trade for Big Gains

Major moves in volume can signal unusual activity, such as insider buying or selling -- or buying or selling by "superinvestors."

Unusual volume can also be a major signal that hedge funds and momentum traders are piling into a stock ahead of a catalyst. These types of traders like to get in well before a large spike, so it's always a smart move to monitor unusual volume. That said, remember to combine trend and price action with unusual volume. Put them all together to help you decipher the next big trend for any stock.

>>5 Stocks Poised to Pop on Bullish Earnings

With that in mind, let's take a look at several stocks rising on unusual volume today.

NuStar

NuStar GP Holdings (NSH) owns general partner and limited partner interests in NuStar Energy, which engages in the terminaling and storage of petroleum products, transportation of petroleum products and anhydrous ammonia, and petroleum refining and marketing. This stock closed up 7% at $25.43 in Monday's trading session.

Monday's Volume: 404,000

Three-Month Average Volume: 235,914

Volume % Change: 105%

>>5 Stocks Poised for Breakouts

From a technical perspective, NSH soared higher here and broke out above some near-term overhead resistance levels at $24.28 to $24.66 with above-average volume. This stock has been uptrending strong for the last month and change, with shares moving higher from its low of $19.34 to its intraday high of $25.52. During that move, shares of NSH have been consistently making higher lows and higher highs, which is bullish technical price action.

Traders should now look for long-biased trades in NSH as long as it's trending above Monday's low of $23.50 and then once it sustains a move or close above Monday's high of $25.52 with volume that's near or above 235,914 shares. If we get that move soon, then NSH will set up to re-test or possibly take out its next major overhead resistance levels at $26.82 to its 200-day at $26.95. Any high-volume move above those levels will then give NSH a chance to tag $30 to $32.

Synergy Resources

Synergy Resources (SYRG) is an exploration-stage company engaged in oil and gas acquisitions, exploration, development and production activities. This stock closed up 2.8% at $11.03 in Monday's trading session.

Monday's Volume: 949,000

Three-Month Average Volume: 589,711

Volume % Change: 75%

>>5 Rocket Stocks to Buy Now

From a technical perspective, SYRG trended up here right above some near-term support at $10.54 and into new 52-week-high territory with above-average volume. This stock has been uptrending strong for the last five months, with shares soaring higher from its low of $6.23 to its intraday high and new 52-week high at $11.40. During that uptrend, shares of SYRG have been consistently making higher lows and higher highs, which is bullish technical price action.

Traders should now look for long-biased trades in SYRG as long as it's trending above some key near-term support at $10.54 and then once it sustains a move or close above its 52-week high at $11.40 with volume that's near or above 589,711 shares. If we get that move soon, then SYRG will set up to enter new 52-week-high territory above, which is bullish technical price action. Some possible upside targets off that move are $13 to $15.

To see more stocks rising on unusual volume, check out the Stocks Rising pn Unusual Volume portfolio on Stockpickr.

-- Written by Roberto Pedone in Delafield, Wis.


RELATED LINKS:



>>5 Stocks Under $10 to Trade for Breakouts



>>The Pros Hate These 5 Stocks -- Should You?



>>Why I'm Sticking By Dow 55,000

Follow Stockpickr on Twitter and become a fan on Facebook.

At the time of publication, author had no positions in stocks mentioned.

Roberto Pedone, based out of Delafield, Wis., is an independent trader who focuses on technical analysis for small- and large-cap stocks, options, futures, commodities and currencies. Roberto studied international business at the Milwaukee School of Engineering, and he spent a year overseas studying business in Lubeck, Germany. His work has appeared on financial outlets including

CNBC.com and Forbes.com. You can follow Pedone on Twitter at www.twitter.com/zerosum24 or @zerosum24.


Monday, January 26, 2015

Changes expected as Finra weighs controversial broker-comp rule

finra, compensation, disclosure, wirehouse, independent broker-dealer, rule, recruiting, bonus

Finra could soon act on a rule that would force brokers to reveal recruiting incentives to their clients, but the controversial regulation may undergo some changes on its way to final approval.

The Financial Industry Regulatory Authority Inc. has put the topic on the agenda for its Sept. 19 meeting, after bumping it off the schedule for its July meeting.

Under its original proposal in January, Finra would require brokers to disclose enhanced recruitment compensation — including signing bonuses, upfront or back-end bonuses, loans, accelerated payouts and transition assistance, among other arrangements — to any client they solicited for one year following their transfer to a new firm. The rule would not apply to incentives totaling less than $50,000.

“My own guess is, it's not going to go,” said Peter Chepucavage, general counsel at Plexus Consulting Group LLC. “The board is either going to table it or modify it.”

Whatever the Finra board decides Thursday will not be the last word. It may issue a revised proposal and ask for comments from its members or it could send the rule to the Securities and Exchange Commission, which would conduct its own comment period and possibly make its own changes.

Finra chief executive Rick Ketchum said the rule is designed to make potential conflicts of interest transparent to consumers.

“We believe investors should be informed of conflicts involving recruitment packages when they make the important decision to move an account, especially when the decision to move means having to sell off proprietary products and taking a possible tax hit,” Mr. Ketchum said in a speech this year. “When a broker moves to a new firm and calls a customer and says, 'You should move your account with me because it will be good for you,' the customer needs to know all of the broker's motivations for moving.”

The proposal generated 65 comments letters. Generally, large wirehouses came out in favor, while independent broker-dealers opposed it. Morgan Stanley Smith Barney LLC, for instance, argued that the rule would help protect clients. Cetera Financial Group said it would be too complex, difficult to implement and would violate brokers' privacy.

The Financial Services Institute Inc., which represents independent broker-dealers and financial advisers, said it supports illuminating conflicts of interest, but asserted that the rule is flawed because it's too broad in one instance by including transition assistance and too narrow in another because it leaves out retention bonuses.

David Bellaire, the FSI's executive vice president and general counsel, anticipates that Finra will make changes.

“I would suspect we'll see that retention bonuses will be included in the rule and ! also that we will see Finra take a more principles-based approach,” Mr. Bellaire said. “It could put the burden on firms to identify recruiting practices that create conflicts of interest, and then give guidance on how to disclose them to investors.”

One broker recruiter wants the rule to die but concedes that that is probably wishful thinking.

“I believe Finra is hellbent to get this passed, and a case can be made that the wirehouses are behind it,” said Ron Edde, president and chief executive of Millennium Career Advisors. “They know it will suppress adviser movement. They'd like nothing more than to eliminate these bonuses. This is not popular among advisers in the field force.”

Another critic said that Finra's original rule would fail to achieve its objective of shining a light on potential compensation conflicts because it doesn't look at all of them.

“The way this has been drafted is silly,” said Brian Hamburger, president and chief executive of MarketCounsel LLC, a business and regulatory compliance consulting firm. “To only disclose the amount in recruiting deals takes off the hook those firms that are paying obscene amounts in retention deals. To only disclose this narrow subset of compensation practices is completely misleading.”

The premise of the rule is wrong, according to Mr. Edde.

“I have yet to see — nor has anyone else — a single shred of evidence where a client has been materially harmed by an adviser receiving a transition bonus for changing firms,” he said. “The public doesn't have a need to know everything.”

A better approach would be a more generic one, Mr. Chepucavage said. He would favor a simple disclosure by the adviser's new firm saying he or she may have received a significant bonus for making a job change. After receiving the notice, a potential client could delve further into the situation.

“It only applies to customers who are interested,” Mr. C! hepucavag! e said. “If they're happy with this rep, they're going to go with him. If they're not happy, they're going to stay at the old firm.”

Sunday, January 25, 2015

Analysts' Actions: APA CAG CHS DAL FITB

NEW YORK (TheStreet) -- CHANGE IN RATINGS

Apache (APA) was upgraded at Oppenheimer to outperform from perform. $100 price target. Stock has priced in risks and the company is buying back shares and debt, Oppenheimer said.

BB&T (BBT) was upgraded at Goldman Sachs to buy. Stock appears inexpensive relative to its peers, Goldman said.

ConAgra (CAG) was downgraded at J.P. Morgan to neutral from overweight. $33 price target. Consensus estimates have downside risk, J.P. Morgan said. Cavium (CAVM) was downgraded at Lazard Capital Markets to neutral from buy. Valuation call, as the stock has a price-to-earnings ratio of 29, based on expected 2014 earnings. Church & Dwight (CHD) was upgraded at Deutsche Bank to buy from hold. $66 price target. Company can sustain 3%-4% organic sales and double-digit earnings growth, annually, Deutsche Bank said. Chico's FAS (CHS) was upgraded at Keybanc to buy from hold. $21 price target. Company has long-term growth potential with earnings power approaching $2 a share, Keybanc said. Comerica (CMA) was upgraded at Goldman Sachs to neutral. Company should benefit from lower interest in short-end demand, Goldman said. [Read: US Airways Could Prosper Without Merger, Analyst Says] Charles River (CRL) was initiated with a neutral rating at UBS. Reflects valuation, although there are early-stage signs of improvement, said UBS. Price target is $49. Covance (CVD) was initiated with a buy rating at UBS. Reflects its late-stage clinical development and margin-expansion opportunity, UBS said. Price target is $96. Delta Air Lines (DAL) was upgraded at J.P. Morgan to overweight from neutral. $26 price target. Newly introduced tax rate not to be confused with a diminished earnings outlook, J.P. Morgan said. Fifth Third (FITB) was downgraded at Goldman Sachs to neutral from buy. Company is leveraged to slower mortgage activity, Goldman said. Fortuna Silver Mines (FSM) was upgraded to hold at TheStreet Ratings. Hologic (HOLX) was downgraded to hold at TheStreet Ratings. [Read: Less-Than-Shiny Gold Miners] Kellogg (K) was downgraded at J.P. Morgan to underweight from neutral. $60 price target. Top line concerns and difficult comparisons, J.P. Morgan said. Kennametal (KMT) was downgraded at Bank of America/Merrill Lynch. Valuation call, based on a $50 price target, BofA/Merrill said. US Airways Group (LCC) was upgraded at J.P. Morgan to overweight from neutral. $26 price target. Stand-alone prospects are materially better than implied by the market, J.P. Morgan said.

Mead Johnson Nutrition (MJN) was upgraded at J.P. Morgan to overweight from neutral. $88 price target. Top-line growth should be valued more highly than the pending cost headwinds and the possibility of further Chinese government intervention, J.P. Morgan said.

Public Service Enterprise (PEG) was upgraded at Jefferies to buy from hold. The company is gaining more political support for its "energy strong" capital spending program, said Jefferies. Price target is $37.

Quintiles (Q) was initiated with a buy rating at UBS. Reflects scale, late-stage development exposure and supplemental growth from CSO, said UBS. Price target is $51.

Steve Madden (SHOO) was downgraded at Wedbush to neutral from outperform. Valuation call, based on a $55 price target, Wedbush said. Volcano (VOLC) was upgraded at BMO Capital to outperform from market perform. $28 price target. Stock is attractively valued, and the company can achieve near-term earnings expectations, BMO Capital said. [Read: Wealth Concentration for the Top 1% Is at Worst Level Since 1929] Werner (WERN) was downgraded at Keybanc to hold from buy. Company warned and is facing several issues, Keybanc said. STOCK COMMENTS / EPS CHANGES Aetna (AET) numbers were raised at UBS. Estimates were raised as medical-claims trends should continue and CVH synergies could be better than expected, said UBS. Price target goes to $76. Celldex (CLDX) price target was raised at Jefferies to $29 ahead of CDX-1127 PI trial data release. Packaging Corp of America (PKG) numbers were reduced at Jefferies. Earnings estimates were adjusted lower to reflect less accretion from BZ acquisition, said Jefferies. Price target was reduced to $68. PerkinElmer (PKI) numbers were raised at UBS. Estimates were raised as the company enters expanding markets and balances investment vs. growth, said UBS. Price target goes to $43. >To submit a news tip, email: tips@thestreet.com. Follow TheStreet on Twitter and become a fan on Facebook.

This article was written by a staff member of TheStreet.

Builders, REITs Among S&P’s Best Performers

Reuters Toll Brothers is selling unbuilt luxury homes in California.

Companies in the home building industry and real estate investment trusts are among the best performers in the Standard & Poor’s 500 Index today.

In the homebuidling category:

Weyerhaeuser (WY), the producer of lumber, was up nearly 3%. On Thursday, Citigroup Analyst Anthony Pettinari wrote that Weyerhaeuser could sell its homebuilder unit for between $2.5 billion and $3.5 billion, and interested buyers in the unit, WRECO, could include Lennar (LEN), Toll Brothers (TOL) and Brookfield Residential Properties (BRP). About 67% of the Weyerhaeuser unit’s roughly 27,000 lots are in California. Citi has a Buy rating on Weyerhauser and a $35 price target. Lennar, the home builder, was up 2.6%. Masco (MAS), the building materials maker, was up 2%.  PulteGroup (PHM), the home builder, was up 2%. DR Horton (DHI), the home builder, was up 1.9%.

Among real estate trusts:

American Tower  (AMT), the diversified  REIT, is the best performer in the index. It was up 4.6% after saying Friday it will buy the parent of tower operator Global Tower Partners for $4.8 billion. HCP (HCP), a healthcare REIT, was up 3.3%. Prologis (PLD) an industrial REIT, was up 2.8%. Vornado Realty Trust (VNO) was up 2.7%. Boston Properties (BXP), the office REIT, was up 2.3%. Equity Residential (EQR), a residential REIT, was up 2.4%. Ventas (VTR), a healthcare REIT, was up 2%.

 

Saturday, January 24, 2015

Buy, Sell, or Hold: NVIDIA

The first half of 2013 has been relatively slow for NVIDIA  (NASDAQ: NVDA  ) , with shares mostly keeping pace with the broader market. This is expected, as the company made the conscious decision to delay the Tegra 4 time frame in order to focus on Tegra 4i. The graphics business continues to hold up admirably in the face of a slow PC market, as NVIDIA's target gamer market remains resilient.

NVIDIA is now entering the licensing business with its graphics architecture, which could translate into new opportunities in mobile. The company could now potentially earn wins at the top two smartphone vendors, Apple  (NASDAQ: AAPL  ) and Samsung, which aren't interested in using Tegra processors directly.

In the following video, Fool contributor Evan Niu, CFA, and Eric Bleeker, CFA, discuss NVIDIA at current prices.

The tech world has been thrown into chaos as the biggest titans invade one another's turf. At stake is the future of a trillion-dollar revolution: mobile. To find out which of these giants is set to dominate the next decade, we've created a free report called "Who Will Win the War Between the 5 Biggest Tech Stocks?" Inside, you'll find out which companies are set to dominate and give in-the-know investors an edge. To grab a copy of this report, simply click here -- it's free!

Thursday, January 22, 2015

Has Daily Journal Made You Any Real Money?

Although business headlines still tout earnings numbers, many investors have moved past net earnings as a measure of a company's economic output. That's because earnings are very often less trustworthy than cash flow, since earnings are more open to manipulation based on dubious judgment calls.

Earnings' unreliability is one of the reasons Foolish investors often flip straight past the income statement to check the cash flow statement. In general, by taking a close look at the cash moving in and out of the business, you can better understand whether the last batch of earnings brought money into the company, or merely disguised a cash gusher with a pretty headline.

Calling all cash flows
When you are trying to buy the market's best stocks, it's worth checking up on your companies' free cash flow once a quarter or so, to see whether it bears any relationship to the net income in the headlines. That's what we do with this series. Today, we're checking in on Daily Journal (Nasdaq: DJCO  ) , whose recent revenue and earnings are plotted below.

Source: S&P Capital IQ. Data is current as of last fully reported fiscal quarter. Dollar values in millions. FCF = free cash flow. FY = fiscal year. TTM = trailing 12 months.

Over the past 12 months, Daily Journal generated $3.7 million cash while it booked net income of $3.8 million. That means it turned 11.0% of its revenue into FCF. That sounds pretty impressive. However, FCF is less than net income. Ideally, we'd like to see the opposite.

All cash is not equal
Unfortunately, the cash flow statement isn't immune from nonsense, either. That's why it pays to take a close look at the components of cash flow from operations, to make sure that the cash flows are of high quality. What does that mean? To me, it means they need to be real and replicable in the upcoming quarters, rather than being offset by continual cash outflows that don't appear on the income statement (such as major capital expenditures).

For instance, cash flow based on cash net income and adjustments for non-cash income-statement expenses (like depreciation) is generally favorable. An increase in cash flow based on stiffing your suppliers (by increasing accounts payable for the short term) or shortchanging Uncle Sam on taxes will come back to bite investors later. The same goes for decreasing accounts receivable; this is good to see, but it's ordinary in recessionary times, and you can only increase collections so much. Finally, adding stock-based compensation expense back to cash flows is questionable when a company hands out a lot of equity to employees and uses cash in later periods to buy back those shares.

So how does the cash flow at Daily Journal look? Take a peek at the chart below, which flags questionable cash flow sources with a red bar.

Source: S&P Capital IQ. Data is current as of last fully reported fiscal quarter. Dollar values in millions. TTM = trailing 12 months.

When I say "questionable cash flow sources," I mean items such as changes in taxes payable, tax benefits from stock options, and asset sales, among others. That's not to say that companies booking these as sources of cash flow are weak, or are engaging in any sort of wrongdoing, or that everything that comes up questionable in my graph is automatically bad news. But whenever a company is getting more than, say, 10% of its cash from operations from these dubious sources, investors ought to make sure to refer to the filings and dig in.

With 65.9% of operating cash flow coming from questionable sources, Daily Journal investors should take a closer look at the underlying numbers. Overall, the biggest drag on FCF also came from changes in taxes payable, which represented 29.3% of cash from operations.

A Foolish final thought
Most investors don't keep tabs on their companies' cash flow. I think that's a mistake. If you take the time to read past the headlines and crack a filing now and then, you're in a much better position to spot potential trouble early. Better yet, you'll improve your odds of finding the underappreciated home-run stocks that provide the market's best returns.

Looking for alternatives to Daily Journal? It takes more than great companies to build a fortune for the future. Learn the basic financial habits of millionaires next door and get focused stock ideas in our free report, "3 Stocks That Will Help You Retire Rich." Click here for instant access to this free report.

We can help you keep tabs on your companies with My Watchlist, our free, personalized stock tracking service.

Add Daily Journal to My Watchlist.

3 Buy-Now Stocks from the "World's Greatest Growth Portfolio"

In January 2012, I identified 13 stocks that would comprise an ideal growth portfolio. Since then, investors following along with me have turned $10,000 into $13,930 -- a 39.3% increase, and $1,280 -- or 12.8 percentage points -- better than if they had just invested the money in the S&P 500.

Every month, I look over these stocks to see which three are tempting. I call these my "Buy Now" stocks because I think they're pretty good deals. Read the chart below to see how the whole portfolio has performed, check out my best buys and, at the end, I'll offer up access to a special premium report on one of the 13 stocks included.

Company

Allocation

Jan. 1 Balance

Current balance

Change

Core

Baidu

11.5%

 $115.00

 $102.35

(11%)

Google

11.5%

 $115.00

 $144.10

25.3%

Amazon.com

11.5%

 $115.00

 $130.18

13.2%

Whole Foods

11.5%

 $115.00

 $133.75

16.3%

Tier One

Starbucks

7.5%

 $75.25

 $94.44

25.5%

Apple

7.5%

 $75.25

 $59.52

(20.9%)

Intuitive Surgical

7.5%

 $75.25

 $76.68

1.9%

IPG Photonics

7.5%

 $75.25

 $67.05

(10.9%)

Tier Two

3D Systems (NYSE: DDD)

5%

 $50.00

 $63.45

26.9%

LinkedIn (NYSE: LNKD)

5%

 $50.00

 $81.95

63.9%

Stratasys (NASDAQ: SSYS)

5%

 $50.00

 $52.60

5.2%

Westport Innovations

5%

 $50.00

 $60.10

20.2%

lululemon athletica (NASDAQ: LULU)

5%

 $50.00

 $42.30

(15.4%)

 

       

Year-to-date

 

 $1,000.00

 $1,108.46

10.8%

Returns Since Inception

     

39.3%

Source: YCharts. All numbers accurate as of market open, July 5, 2013. Dividends not included, as this is a growth portfolio focused on capital appreciation.

Stratasys
First on my list of "buy now" stocks is one half of the duopoly in 3-D printing, with 3D Systems -- another company in this portfolio -- representing the other half. In truth, there are many other smaller players in the field as well, but they are slowly being bought out by the Big Two.

Case in point: Earlier this year, Stratasys merged with Isreali-based Objet. The new company solidified Stratasys' leading position in making 3-D printers for use by industrial customers. While I liked that move, I think the company's most recent purchase of consumer-facing Makerbot is even more interesting. 

3D Systems and its CubeX printer have dominated the consumer printing market, but combining Makerbot's Replicator with Stratasys' financial backing could mean that things are going to start to heat up in this industry.

Although Stratasys shares are pretty expensive right now, I see its market cap easily doubling (or more) in the next decade if it can keep up the positive momentum.

lululemon athletica
This retailer, which got its start by offering yoga-wear to athletic-minded women but has now branched out, had a recent earnings report that by most measures was solid. Why, then, did it drop so harshly?

Because CEO Christine Day, who has led the company during an impressive growth spurt over the past five years, announced that she will resign when a replacement is found.

I'm a big fan of Christine Day, and think her loss is important for investors to take note of. However, given the stock's 20% sell-off, I think much of the risk associated with Day leaving has already been priced in. What we're left with is a company that has a great brand and a solid growth story. With Day likely having a hand in finding her replacement, I think Lulu's shares are worth looking into right now.

LinkedIn
While there isn't necessarily any new news to add to LinkedIn's story, I think it has the potential to be one of the great growth stories of the 21st century. The company has three revenue streams -- one based on helping companies fill openings, one based on helping individuals find jobs, and one based on advertising -- that are all growing by more than 50% per year.

At its highest potential, LinkedIn could disrupt the HR departments at companies worldwide, allowing for cheaper, more efficient, and streamlined recruiting. While I think the price point earlier this month of about $160 per share was more tempting, I fully plan on adding small portions of LinkedIn to my Roth IRA as the company's story continues to unfold.

One that was left off ...
One company left off the list that I still like is Apple.  The company has a history of cranking out revolutionary products ... and then creatively destroying them with something better. Read about the future of Apple in the free report, "Apple Will Destroy Its Greatest Product." Can Apple really disrupt its own iPhones and iPads? Find out by clicking here.

Wednesday, January 21, 2015

How the New York Stock Exchange Has Changed in the Last 30 Years

I recently met up with Doreen Mogavero, a longtime New York Stock Exchange trader, on the floor of the NYSE.

I asked Doreen how the world's most famous stock exchange has changed during her three-decade career. Here's what she had to say (transcript follows):

Doreen Mogavero: I've been a trader on the floor of the New York Stock Exchange since 1979.

Morgan Housel: How has the New York Stock Exchange changed during the time you've been here?

Mogavero: That's a very broad question. We've changed in a number of ways, and I think one of our very best points is that we always do change, right? I think obviously technology would be the biggest change that we've seen, and the effect that technology has had on the trading floor in terms of the amount of people that are here.

Housel: So when we look right behind you, there are shockingly few people down there, and it seems like a large portion of who is down there is the media. So what happened to all the people? Where did they go?

Mogavero: Well I wouldn't say "shockingly"; I would say there are less people than there used to be, obviously, but I think that a lot of the people left for actually a variety of reasons. As we all saw the Baby Boom generation move up, you had a lot of people retire, so that was one reason we saw an exodus from the building. Obviously some of the jobs that we did previously can now be done by technology and computers, so we've seen people leave for that reason. And you know, a lot of people who were in the Baby Boomer generation that did not retire, there was a huge learning curve in learning all of this technology, and I think not everybody was suited to learn it. When you get to be 55, 60 years old, it's kind of a big; I know this for a fact. It's a very big learning curve, so not everybody chose to do it.

Housel: And those changes took place really in the last decade, is that right?

Mogavero: Yeah.

Housel: So if we came here in 1999 or 2000, there would be a lot more people down on the floor today, right?

Mogavero: Oh yes, many more.

Tuesday, January 20, 2015

No, Verizon Doesn't Want to Ditch Contracts

There were recent reports that Verizon  (NYSE: VZ  ) CEO Lowell McAdam would be interested in ditching service contracts. However, this isn't likely to be the case, since the major carriers -- Verizon, AT&T  (NYSE: T  ) , and Sprint Nextel  (NYSE: S  ) -- have spent years building fortresses around subsidies and contracts to reduce the risk of becoming commoditized service providers. Big Red is certainly watching how T-Mobile's big move away from contracts works out, and could adapt if need be.

In the following video, Fool contributor Evan Niu, CFA, explains why Verizon definitely doesn't want to get rid of contracts.

If you're on the lookout for high-yielding stocks, The Motley Fool has compiled a special free report outlining our nine top dependable dividend-paying stocks. It's called "Secure Your Future With 9 Rock-Solid Dividend Stocks." You can access your copy today at no cost! Just click here.

Monday, January 19, 2015

Friday’s Analyst Moves: Wal-Mart Stores, Inc., Goldman Sachs Group Inc, Mattel, Inc., More (WMT, GS, MAT, More)

Before Friday's opening bell, a number of big name dividend stocks were the subject of analyst moves. Below, we highlight the important analyst commentary for investors.

Goldman Sachs Upgraded to “Outperform”

Keefe, Bruyette & Woods has boosted its rating on Goldman Sachs Group Inc (GS) from “Market Perform” to “Outperform.” The firm has also raised estimates on the company as it is now seeing better growth outside of trading. GS has a dividend yield of 1.39%.

Exelon Upgraded at Citi

Exelon Corporation (EXC) has been upgraded from “Sell” to “Neutral” at Citigroup as the nuclear overhang could subside. EXC has a dividend yield of 3.64%.

Fifth Third Bancorp

Fifth Third Bancorp (FITB) has been upgraded from “Neutral” to “Buy” at Citigroup as its recent pullback as made it stock price attractive. Analysts also see the company possibly accelerating buyback activity. FITB has a dividend yield of 2.93%.

Credit Suisse Starts Coverage on Garmin

Credit Suisse has started coverage on Garmin L

What Is a Good Credit Score?

We all want to have "good" credit, but what does that mean exactly? The answer to this question isn't so simple. In fact, it mainly depends on what you're trying to qualify for. For instance, if you have a credit score of 690, you'll probably have no problem getting a loan for a new car with a pretty competitive interest rate. However, a mortgage lender may be a little more cautious, unless you have a big down payment or are willing to accept an FHA mortgage.

Here's what you need to know about the numbers you see when you check your own credit score, and what lenders consider to be "good" credit.

First, know what you're looking at
As far as credit scoring goes, there are many services out there that offer scores along with your credit report, but unless you're looking at your FICO score, you're not getting an accurate picture of where you stand.

The FICO scoring formula is used in more than 90% of lending decisions, and is available only through the Fair Isaac Company or one of its partners. For example, Discover offers access to the FICO score as a perk for some of its cardholders. If you don't currently have access to yours, myFICO.com is the only place you can buy your actual FICO score from all three credit bureaus.

The exact formula used to calculate your FICO score is a closely guarded secret, and is updated regularly, but the company does offer some insight into what makes up your score. Specific weights are given to five broad categories of credit information, which include payment history, the amounts you owe, the types of credit accounts you have, the length of your credit history, and any new credit you have. A full description of each category is available here.

Auto loans are one of the easiest types of credit right now
You can get an auto loan even with an awful credit score, but you're going to pay for it. Some subprime auto loans come with interest rates higher than 23%, which has resulted in a surge of repossessions as many consumers can't afford the high payments.

Source: wikipedia

Many auto lenders use "tiers" of credit scores in order to qualify customers for car loans. According to FICO, a top-tier score is 720 or above, and consumers in this category can expect to pay about 3.3% on a 60-month new auto loan. And, the next tier of scores from 690-719 has a slightly higher average of 4.7%.

However, beyond that tier, the rates rise rapidly. Someone with a 670 can expect their rate to be around 6.8% and anyone below 660 can expect to pay a double-digit interest rate, and those in the lowest tier (below 590) get an average rate of above 17%.

To put in perspective, consider two buyers who purchase a $20,000 new car, one with a 750 FICO score and one with a 550. The difference in monthly payments is substantial, at $362 and $497, respectively. And, over the life of a five-year car loan, the poor credit borrower will end up paying more than $8,000 extra for the same car.

So, for buying a car, it's safe to say that a "good" credit score is above a 690. Below that level, interest rates get very high, very fast.

Mortgages are a bit more selective
There are two main varieties of mortgage loans; conventional and FHA. Now, an FHA loan is relatively easy to qualify for since they are guaranteed by the government, and many lenders simply require a 600 credit score and a small down payment. However, you'll have to pay FHA mortgage insurance (which isn't cheap) both up front, and annually for the life of the loan.

Source: www.aag.com  via flickr

For "good credit" borrowers, a conventional loan is usually the cheaper option, and the credit score requirements are substantially higher. Most lenders want a 760 in order to provide the lowest interest rates. And, while the difference in interest rates between "bad credit" and "good credit" borrowers is narrower than for, say, car loans, the longer timeframe makes the difference in payments even more substantial.

For example, a borrower with a 760 FICO score or above can expect to pay about 3.8% on a 30-year mortgage. And a borrower with a 630 can expect to pay about 5.4%. While this doesn't sound like a big difference, it makes the difference of $85,000 over the life of a 30-year, $250,000 mortgage.

To give you an idea of how strict home lending is right now, consider that the average score for an approved conventional purchase mortgage is 755, and the average FICO score for a rejected loan is 723, which is well in the range that is considered to be "good credit" in other types of lending.

In other words, a "good" credit score is actually pretty high, for the purposes of buying a home.

There's a credit card for everyone, but what's a "good" credit card?
Even with poor credit, most people can qualify for a credit card. However, you'll probably end up paying high fees and interest rates.

A good credit card is one that not only has a competitive interest rate and annual fee, but also rewards you for your business. The qualifications vary among individual credit cards, and the website Credit Karma publishes the average credit score approved for most major credit cards.

And, while the numbers vary slightly, it seems that the average score to get approved for the better reward cards is well into the 700's.

Aim as high as possible
Basically, the higher your credit score is, the lower you'll pay to borrow money throughout your life. So, why not shoot for the best credit score possible?

From looking at the categories above, it seems that home buying is the strictest, meaning that the "top tier" of credit scores for mortgage lending is higher than that of auto lending or credit card approval.

What I mean by this is that if you aim for a 760 FICO score or higher, you should never have to worry about being denied the best interest rates, no matter what you're buying.

So, since the FICO people give you a pretty good idea of what they are looking for, take a look at your own finances and make adjustments accordingly. Maybe you could pay down some of your credit cards, or stop applying for new credit for a while in order to boost your score.

While building your credit score up to the higher levels might require some sacrifice on your part in the meantime, it will be well worth it in the end.

A high credit score + smart investing = A bright financial future
The smartest investors know that dividend stocks simply crush their non-dividend paying counterparts over the long term. That's beyond dispute. They also know that a well-constructed dividend portfolio creates wealth steadily, while still allowing you to sleep like a baby. Knowing how valuable such a portfolio might be, our top analysts put together a report on a group of high-yielding stocks that should be in any income investor's portfolio. To see our free report on these stocks, just click here.

Saturday, January 17, 2015

5 Low-Priced Stocks to Trade for Big Gains

BALTIMORE (Stockpickr) -- Sometimes, good things come in small packages. That's certainly true in the investing world, where trading setups in the lowest-priced names can often pack the biggest punch.

Read More: 12 Stocks Warren Buffett Loves in 2014

Today we're taking a look at five high-probability setups in small, low-priced stocks .

From a psychological standpoint, there's something magnetic about low-priced names. That's the only explanation for the elevated trading volumes in the under-$15 stocks.

Just so we're clear, a low share price doesn't necessarily mean that we're talking about a small company, or even a "cheap" one by valuation standards. In fact, by itself, share price isn't a very useful metric at all. But it's true that lower-priced names tend to trade more actively than pricier stocks of similar market capitalization. And when stocks under $15 start making moves, the gains can be substantial on a percentage basis.

Since the beginning of the summer, low-priced stocks have been seeing favor in the broad market again as investors crank up their risk tolerances. And that's making some small names tradable for big gains right now. That's why we're taking a technical look at five stocks under $15 today.

For the unfamiliar, technical analysis is a way for investors to quantify qualitative factors, such as investor psychology, based on a stock's price action and trends. Once the domain of cloistered trading teams on Wall Street, technicals can help top traders make consistently profitable trades and can aid fundamental investors in better planning their stock execution.

Without further ado, let's take a look at five technical setups worth trading now.

Read More: 5 Rocket Stocks to Buy for a Short Trading Week

Thompson Creek Metals


Up first is small-cap mining company Thompson Creek Metals (TC). This small mining stock cratered at the end of last year, only to rebound in a big way at the start of this year. If you'd picked up shares on Jan. 2, you'd be crushing the broad market with 28% gains year-to-date.

But don't worry if you missed the big move; TC looks primed for a second leg higher in September.

That's because Thompson Creek is forming a textbook ascending triangle pattern. The ascending triangle is a bullish price setup that's formed by horizontal resistance above shares (at $3.10 in this case) and uptrending support to the downside. Basically, as TC bounces in between those two technically significant price levels, it's getting squeezed closer to a breakout above that $3.10 price ceiling. When that happens, we've got a buy signal on our hands.

Relative strength adds some confidence to the upside trade in TC: the relative strength line has been making higher lows since shares bottomed back in December. As long as that uptrend in relative strength stays intact, TC should keep outperforming the S&P 500.

Read More: 5 Stocks Poised for Big Breakouts

McDermott International



We're seeing the exact same setup right now in shares of McDermott International (MDR). The key difference with the ascending triangle in MDR is that the price action hasn't been quite as pretty as in TC; shares have seen much more haphazard trading since this pattern started forming back in late March. But even if the chart looks a bit rough, the trading implications are exactly the same on this trade. The buy signal in MDR comes on a breakout above resistance at $8.25.

Why all the significance at $8.25? It all comes down to buyers and sellers. Price patterns are a good quick way to identify what's going on in the price action, but they're not the reason a stock is tradable. Instead, the "why" comes down to basic supply and demand for McDermott's stock.

The $8.25 resistance level is a price where there has been an excess of supply of shares; in other words, it's a spot where sellers have previously been more eager to step in and take gains than buyers have been to buy. That's what makes a breakout above $8.25 so significant -- the move means that buyers are finally strong enough to absorb all of the excess supply above that price level. Wait for that breakout before you buy.

Read More: 5 Breakout Stocks Under $10 Set to Soar

Golden Eagle Entertainment



Small-cap airline entertainment platform stock Golden Eagle (ENT) is another low-priced breakout trade -- but the good news is that this one triggered in yesterday's session, making it buyable today. You didn't want to own ENT before this week; shares are down more than 12% this year thanks to a constant selloff since the end of the first quarter. But shares started looking "bottomy" at the start of the summer, and yesterday's close above $12.50 is triggering a buy.

Golden Eagle is currently forming a double bottom, a bullish price pattern that looks just like it sounds: The double bottom is formed by a pair of swing lows that bottom out at approximately the same price level. The buy signal came on a push through the resistance level that separates those two lows. For ENT, that breakout level to watch was $12.50.

If you decide to jump into shares here, I'd recommend keeping a protective stop at the 50-day moving average.

Read More: 5 Stocks With Big Insider Buying

BGC Partners



It's not hard to see why 2014 has been a good year for investment brokerage firm BGC Partners (BGCP). With a global rally in the equity market this year, rising trading volumes and account values are buoying profitability at brokers. But it's not just the fundamental picture that looks attractive in BGCP. Shares are looking solid from a technical standpoint in 2014 as well, and you don't need to be an expert technical trader to see why.

The setup in BGCP is about as simple as they get. Shares have been bouncing their way higher in a well-defined uptrending channel, a setup that's formed by a pair of parallel trend lines that identify the high-probability range for shares of BGC Partners to trade within. Put simply, every test of trend line support has provided buyers with a low-risk, high-reward opportunity to get into shares of this low-priced stock. So now it makes sense to buy the next support bounce.

Momentum adds some extra confidence in BGCP's upside potential right now: 14-day RSI has been making higher lows, even as shares have retraced to the bottom of the channel. That's a bullish divergence in RSI that points to a bounce in shares this week. The 50-day moving average has been a good proxy for support on the way up. I'd recommend keeping a protective stop on the other side of it.

Read More: 10 Stocks George Soros Is Buying

Strategic Hotels and Resorts



Strategic Hotels and Resorts (BEE) is another textbook uptrending channel to trade this week. Like BGCP, BEE has been bouncing its way higher in a well-defined uptrend, giving buyers a low-risk opportunity to get into shares on every successive test of trend line support. Now it makes sense to buy the next bounce off of that trend line.

Waiting for a bounce is important for two key reasons: It's the spot where shares have the furthest to move up before they hit resistance, and it's the spot where the risk is the least (because shares have the least room to move lower before you know you're wrong). Remember, all trend lines do eventually break, but by actually waiting for the bounce to happen first, you're ensuring BEE can actually still catch a bid along that line before you put your money on shares.

It looks like we're seeing that bounce this week as shares come up off of the 50-day moving average that's also been a good support proxy for BEE. If you decide to buy here, that level is a good place for a stop once again.

Read More: 10 Stocks Carl Icahn Loves in 2014

To see this week's trades in action, check out the Technical Setups for the Week portfolio on Stockpickr.

-- Written by Jonas Elmerraji in Baltimore.


RELATED LINKS:



>>5 Hated Earnings Stocks You Should Love



>>5 Toxic Stocks You Need to Sell Now



>>Must-See Charts: 5 Big Trades for S&P 2,000

Follow Stockpickr on Twitter and become a fan on Facebook.

At the time of publication, author had no positions in stocks mentioned.

Jonas Elmerraji, CMT, is a senior market analyst at Agora Financial in Baltimore and a contributor to

TheStreet. Before that, he managed a portfolio of stocks for an investment advisory returned 15% in 2008. He has been featured in Forbes , Investor's Business Daily, and on CNBC.com. Jonas holds a degree in financial economics from UMBC and the Chartered Market Technician designation.

Follow Jonas on Twitter @JonasElmerraji


Wednesday, January 14, 2015

3 Stocks Rising on Big Volume

DELAFIELD, Wis. (Stockpickr) -- Professional traders running mutual funds and hedge funds don't just look at a stock's price moves; they also track big changes in volume activity. Often when above-average volume moves into an equity, it precedes a large spike in volatility.

>>5 Hated Earnings Stocks You Should Love

Major moves in volume can signal unusual activity, such as insider buying or selling -- or buying or selling by "superinvestors."

Unusual volume can also be a major signal that hedge funds and momentum traders are piling into a stock ahead of a catalyst. These types of traders like to get in well before a large spike, so it's always a smart move to monitor unusual volume. That said, remember to combine trend and price action with unusual volume. Put them all together to help you decipher the next big trend for any stock.

>>5 Stocks Insiders Love Right Now

With that in mind, let's take a look at several stocks rising on unusual volume recently.

ChipMOS Technologies

ChipMOS Technologies (IMOS), through its subsidiaries, provides semiconductor testing and assembly services and memory and logic/mixed-signal products. This stock closed up 3% at $22.55 in Wednesday's trading session.

Wednesday's Volume: 517,000

Three-Month Average Volume: 265,734

Volume % Change: 117%

From a technical perspective, IMOS spiked notably higher here right off its 50-day moving average of $22.03 with above-average volume. This stock has been uptrending a bit over the last few weeks, with shares moving higher from its low of $20.08 to its intraday high of $23.20. During that move, shares of IMOS have been consistently making higher lows and higher highs, which is bullish technical price action. Market players should now look for a continuation move to the upside in the short-term if IMOS manages to take out Wednesday's intraday high of $23.20 to its 52-week high of $24.09 with strong upside volume flows.

Traders should now look for long-biased trades in IMOS as long as it's trending above its 50-day at $22.03 or above $21 and then once it sustains a move or close above $23.20 to $24.09 with volume that hits near or above 265,734 shares. If that move gets underway soon, then IMOS will set up to enter new 52-week-high territory above $24.09, which is bullish technical price action. Some possible upside targets off that move are $25 to $30.

Osiris Therapeutics

Osiris Therapeutics (OSIR), a stem cell company, focuses on the development and marketing products to treat medical conditions in wound care, orthopedic and sports medicine markets. This stock closed up 9.1% at $16.37 in Wednesday's trading session.

Wednesday's Volume: 1.06 million

Three-Month Average Volume: 278,990

Volume % Change: 290%

From a technical perspective, OSIR exploded higher here back above its 200-day moving average of $15.63 and into breakout territory above some near-term overhead resistance at $15.76 with heavy upside volume. This stock has been uptrending strong for the last month, with shares moving higher from its low of $11.800 to its intraday high of $16.74. During that uptrend, shares of OSIR have been consistently making higher lows and higher highs, which is bullish technical price action. Market players should now look for a continuation move to the upside if shares of OSIR manage to take out Wednesday's intraday high of $16.74 with strong volume.

Traders should now look for long-biased trades in OSIR as long as it's trending above its 200-day at $15.63 or above Wednesday's low of $14.62 and then once it sustains a move or close above $16.74 with volume that's near or above 278,990 shares. If that move triggers soon, then OSIR will set up to re-test or possibly take out its next major overhead resistance levels at $17.50 to $17.60, or even $18.41 to $19.75.

KEYW Holding

KEYW Holding (KEYW), through its subsidiaries, provides mission-critical cybersecurity, cyber superiority and geospatial intelligence solutions to the U.S. Government defense, intelligence and national security agencies, and commercial enterprises. This stock closed up 3% at $10.82 in Wednesday's trading session.

Wednesday's Volume: 1.19 million

Three-Month Average Volume: 578,205

Volume % Change: 145%

From a technical perspective, KEYW spiked higher here right off its 52-week low of $10.08 with above-average volume. This stock has been downtrending badly for the last two months and change, with shares moving lower from its high of $23.09 to its 52-week low of $10.08. During that move, shares of KEYW have been consistently making lower highs and lower lows, which is bearish technical price action. That said, shares of KEYW now look ready to reverse that downtrend and possibly enter a new uptrend since the stock is coming off those levels with volume. Market players should now look for a continuation move to the upside in the short-term if KEYW can manage to clear Wednesday's intraday high of $10.94 to some more near-term overhead resistance at $11.28 with high volume.

Traders should now look for long-biased trades in KEYW as long as it's trending above its 52-week low of $10.08 and then once it sustains a move or close above $10.94 to $11.28 with volume that's near or above 578,205 shares. If that move starts soon, then KEYW will set up to rebound back towards its next major overhead resistance levels at $13.35 to its 200-day moving average of $14.41. Any high-volume move above those levels will then give KEYW a chance to tag its next major overhead resistance levels at $15.20 to its 50-day moving average of $16.26.

To see more stocks rising on unusual volume, check out the Stocks Rising on Unusual Volume portfolio on Stockpickr.

-- Written by Roberto Pedone in Delafield, Wis.


RELATED LINKS:



>>Hedge Funds Hate These 5 Stocks -- Should You?



>>5 Rocket Stocks to Beat a Sideways Market



>>5 Big Charts Ready to Break Out in May

Follow Stockpickr on Twitter and become a fan on Facebook.

At the time of publication, author had no positions in stocks mentioned.

Roberto Pedone, based out of Delafield, Wis., is an independent trader who focuses on technical analysis for small- and large-cap stocks, options, futures, commodities and currencies. Roberto studied international business at the Milwaukee School of Engineering, and he spent a year overseas studying business in Lubeck, Germany. His work has appeared on financial outlets including

CNBC.com and Forbes.com. You can follow Pedone on Twitter at www.twitter.com/zerosum24 or @zerosum24.


Tuesday, January 13, 2015

If Credit Cards Are the 'Pot of Gold,' This Keeps the Tricky Leprechaun at Bay

A pot of gold at the end of the rainbow. Alamy Many an Irish-American child has caught a glimpse of a rainbow, hopped on a bicycle and tried to get-rich-quick by finding a pot of gold at the end. Alas, my adventures in gold chasing ended after a few miles of intense cycling when I realized my goal would forever remain elusive. Unbeknown to me, though, another fictional pot of gold existed under the guise of credit limits. While it's far easier to convince a bank to offer you a credit card than to come across a leprechaun's fortune, the money is just as fictional. Your credit limit is determined by your income, and your behavior can change how much is available for you to charge on a card in a given month. This access to purchasing power offers a tantalizing possibility of living far beyond one's means. Credit Cards Can Create a Debt Cycle The issue with credit cards is similar to the fantasy of gold at the end of a rainbow. Both offer the illusion of wealth and ability to feel rich quickly. Credit allows users to live outside of their means by simply giving into impulse and swiping a plastic card without the thought of whether funds will be available to pay it off. At this point, the financially savvy are rolling their eyes and yelling the following advice at their computer screens: "Don't spend more than you can afford to pay in full each month." Yes, the answer is that simple. Unfortunately, too many American adults behave like children chasing a pot of gold by charging more to their credit cards than they can afford. This behavior is part of what led to Americans hold an average of $27,887 in consumer debt in the United States, according to a recent study by Experian. (Of course given that this number includes credit cards, car loans, personal loans and -- wait for it -- student loans, it's not just a matter of people thoughtlessly splurging. College debt is a real doozy.) Still, it's easy and common to misuse the power of plastic. I have more than $10,000 of available credit. That relatively high credit limit (compared to my income) can be used to my advantage to keep my utilization rates low, but the potential to land into serious consumer debt lurks -- silently -- waiting to smack me with interest rates and monthly payments. As Devious as a Leprechaun If a 24-year-old like myself can easily get access to $10,000 of credit, it's no wonder people fall into the trap of consistently charging far more than they can afford. But the access and the credit cards are not to blame. Big banks are as devious as leprechauns and use prettily packaged incentives like cash back and reward miles to lure you in. Ultimately the ability to avoid their traps comes down to self-control and understanding personal cash flow. Save for a few extenuating emergency circumstances -- buying the latest iPhone doesn't count -- a credit user should never charge more than his or her monthly budget allows. Credit cards are a vital financial tool. They reduce to amount of cash one needs to carry around. Swiping plastic helps build credit history and when used responsibly can improve a credit score. A line of credit allows someone to make a large purchase that could be paid off in full by the end of the month, but perhaps not right at the time of the transaction. Credit cards can even be used to essentially beat banks at their own game by churning them for rewards. While credit cards may feel like the pot of gold at the end of a rainbow, credit are in their own way the real treasure -- in that they help you keep more of yours. Plus, you don't have to deal with any pesky leprechauns.

5 Hated Stocks You Should Love

DELAFIELD, Wis. (Stockpickr) -- This stock market is a short-seller's worst nightmare.

I have watched the bears come after stock after stock and continue to get squeezed out of their positions. Those squeezes are happening with little mercy for the shorts. That latest example was heavily-shorted e-commerce player Zulily (ZU), which exploded higher on Thursday by 18% to $72.75 a share after a breakout fourth-quarter earnings report. This stock has absolutely destroyed the shorts since it came public around $40 last November and is now trading in new all-time-high territory.

>>5 Stocks Under $10 Setting Up to Soar Higher

Another name that continues to take it to the shorts is Criteo (CRTO), which I flagged in Feb. 14's "5 Hated Stocks That Could Get Squeezed Much Higher" at around $43 per share. I mentioned in that piece that shares of CRTO sported a very high short interest of 14.4% and an extremely low float of just 14 million shares. This stock has done nothing but rip higher since then, with the stock printing a new all-time high on Thursday of $51.15 a share. That's practically a gain of 20% in a week for anyone who bought into this squeeze.

Since this market remains in the control of the bulls, I will continue to run my scans for equities that are loved by the short-sellers. These names could be the next candidates to put a thumping on the bears like we've seen this year with Zulily, Tesla Motors (TSLA) and GT Advanced Technologies (XXX). Believe me, hedge funds are doing the exact same thing because they know that heavily-shorted stocks are a target-rich hunting ground for the next monster movers.

>>4 Big-Volume Stocks to Trade for Breakouts

With that in mind, here's a look at five stocks that could be setting up for monster short squeezes soon.

Achillion Pharmaceuticals


One biotechnology player that could be preparing to put a hurting on the shorts is Achillion Pharmaceuticals (ACHN), which discovers, develops and commercializes anti-infective drug therapies in the U.S. and internationally. This stock is off to a decent start in 2014, with shares up around 11%.

The current short interest as a percentage of the float for Achillion International is extremely high at 29.7%. That means that out of the 56.17 million shares in the tradable float, 16.7 million shares are sold short by the bears. This is a monster short interest on a stock with a relatively low float. If buyers step up to the plate on ACHN soon, then we could easily see a huge short-squeeze.

>>4 Biotech Stocks Under $10 Moving HIgher

If you take a glance at the chart for Achillion Pharmaceuticals, you'll notice that this stock has been uptrending for the last month, with shares moving higher from its low of $2.98 to its recent high of $3.87 a share. During that uptrend, shares of ACHN have been making mostly higher lows and higher highs, which is bullish technical price action. This move is quickly pushing shares of ACHN within range of triggering a big breakout trade that could send the shorts running for cover.

Traders should now look for long-biased trades in ACHN if it manages to break out above some near-term overhead resistance levels at $3.87 to $4 a share with strong volume. Look for a sustained move or close above those levels with volume that hits near or above its three-month average action of 2.11 million shares. If that breakout materializes soon, then ACHN will set up ACHN for a possible squeeze higher back towards its next major overhead resistance level at $4.36 a share. Any high-volume move above that level will then give ACHN a chance to re-fill some of its previous gap-down-day zone from last September that started above $7 a share.

Traders can look to buy ACHN off weakness to anticipate that breakout and simply use a stop that sits right below some near-term support at $3.35 a share. One can also buy ACHN off strength once it starts to bust above those breakout levels with volume and then simply use a stop that sits a comfortable percentage from your entry point.

Eagle Bulk Shipping


Another shipping player that could be setting up to inflict some pain on the shorts is Eagle Bulk Shipping (EGLE), which engages in the ocean transportation of various bulk cargoes worldwide. This stock has started to gain some interest from the bulls over the last three months, with shares up 20%.

>>3 Big Stocks Getting Big Earnings Attention

The current short interest as a percentage of the float for Eagle Bulk Shipping is extremely high at 30.4%. That means that out of the 15 million shares in the tradable float, 4.86 million shares are sold short by the bears. The bears have also been increasing their bets from the last reporting period by 4.3%, or by around 199,000 shares. Considering the way the chart is shaping up for shares of EGLE, the shorts could be in for a world of hurt soon.

If you take a glance at the chart for Eagle Bulk Shipping, you'll notice that this stock recently formed a major bottoming pattern, with shares finding buying interest at $3.44, $3.65 and $3.54 a share. Following that bottom, shares of EGLE have started to trend back above both its 50-day and 200-day moving averages. That spike back above its 200-day on Thursday was accompanied by strong upside volume, after 1.54 million shares traded versus its three-month average volume of 870,000 shares. That move is starting to push shares of EGLE within range of triggering a potentially explosive squeeze and breakout trade.

Traders should now look for long-biased trades in EGLE if it manages to break out above some near-term overhead resistance levels at $4.75 to $4.93 a share with high volume. Look for a sustained move or close above those levels with volume that hits near or above its three-month average action of 870,684 shares. If that breakout kicks off soon, then EGLE will set up for a possible squeeze back towards its next major overhead resistance levels at $5.50 to $6.42 a share.

Traders can look to buy EGLE off weakness to anticipate that breakout and simply use a stop that sits right below its 50-day moving average of $3.92 a share. One could also buy EGLE off strength once it starts to clear those breakout levels with volume and then simply use a stop that sits a comfortable percentage from your entry point.

Organovo


One health care player that could be getting ready to destroy the shorts is Organovo (ONVO), which develops three-dimensional bioprinting technology for creating functional human tissues on demand for research and medical applications. This stock has been on fire over the last six months, with shares up huge by 77%.

>>5 Monster Momentum Stocks to Trade

The current short interest as a percentage of the float for Organovo is extremely high at 21.5%. That means that out of the 62.15 million shares in the tradable float, 13.41 million shares are sold short by the bears. The bears have also been increasing their bets from the last reporting period by 11.9%, or by around 1.42 million shares. Those shorts might be pressing their bets at the worst time, since the chart for ONVO is setting up for a potentially explosive move higher.

If you take a look at the chart for Organovo, you'll notice that this stock has been uptrending over the last month, with shares ramping higher from its low of $8.50 to its high of $10.84 a share. During that uptrend, shares of ONVO have been consistently making higher lows and higher highs, which is bullish technical price action. That uptrend has now pushed shares of ONVO within range of triggering a big breakout trade and potentially a monster short-squeeze.

Traders should now look for long-biased trades in ONVO if it manages to break out above some near-term overhead resistance at $10.84 a share with strong upside volume. Look for a sustained move or close above that level with volume that hits near or above its three-month average action of 3.65 million shares. If that breakout gets underway soon, then ONVO will set up for a squeeze back towards its next major overhead resistance levels at $12.38 to $13.65 a share. Any high-volume move above $13.65 will then give ONVO a chance to tag $15 a share.

Traders can look to buy ONVO off weakness to anticipate that breakout and simply use a stop that sits right below its 50-day moving average of $9.90 a share or near more near-term support at $9.48 a share. One can also buy ONVO off strength once it starts to bust above that breakout level with volume and then simply use a stop that sits a comfortable percentage from your entry point.

Agios Pharmaceuticals


Another short-squeeze candidate that looks ready to turn the heat up on the bears is Agios Pharmaceuticals (AGIO), a biopharmaceutical company focused on the development and commercialization of therapeutics in the field of cancer metabolism and inborn errors of metabolism in the U.S. This stock has been blazing a path to the upside in 2014, with shares up 39% so far.

>>Cheap Trades: 5 Breakouts Stocks Under $10

The current short interest as a percentage of the float for Agios Pharmaceuticals is very high at 18%. That means that out of the 11.69 million shares in the tradable float, 2.10 million shares are sold short by the bears. The bears have also been increasing their bets from the last reporting period by 5.9%, or by about 1.99 million shares. Shares of AGIO could be setting up squeeze the shorts into its earnings report, which is scheduled for March 6 before the market open.

If you consult the chart for Agios Pharmaceuticals, you'll notice that this stock has been uptrending over the last month, with shares moving higher from its low of $25 to its recent high of $35.34 a share. During that uptrend, shares of AGIO have been consistently making higher lows and higher highs, which is bullish technical price action. This uptrend is coming after shares of AGIO sold off hard in January from $44.04 to $25 a share. Shares of AGIO are now back on the uptick with the stock quickly approaching a big breakout trade above some near-term overhead resistance.

Traders should now look for long-biased trades in AGIO if it manages to break out above some near-term overhead resistance levels at $35.35 to just above $36 a share with high volume. Look for a sustained move or close above those levels with volume that hits near or above its three-month average volume of 255,262 shares. If that breakout triggers soon, then AGIO will set up to squeeze back toward its next major overhead resistance levels at $40 to its 52-week high at $44.04 a share.

Traders can look to buy AGIO off weakness to anticipate that breakout and simply use a stop that sits a comfortable percentage point from your buy point. One can also buy AGIO off strength once it starts to take out those breakout levels with volume and then simply use a stop that sits a comfortable percentage from your entry point.

Fusion-io


My final short-squeeze trading play is Fusion-io (FIO), which develops, markets and sells storage memory platforms in the U.S. and internationally. This stock has been on a tear so far in 2014, with shares up sharply by 28%.

The current short interest as a percentage of the float for Fusion-io is pretty high at 14.8%. That means that out of the 98 million shares in the tradable float, 14.72 million shares are sold short by the bears. This is a decent short interest, so traders should track shares of FIO for a potential short-squeeze if this stock can trigger a technical breakout soon.

If you look at the chart for Fusion-io, you'll notice that this stock just formed a major bottoming chart pattern at $10.55, $10.52 and $10.32 a share. Following that bottom, shares of FIO have started to spike higher and move within range of triggering a major breakout trade and a potential squeeze higher. That breakout could be explosive since it would push shares of FIO into a previous gap-down-day zone from last October.

Traders should now look for long-biased trades in FIO if it manages to break out above some near-term overhead resistance at $11.75 a share to its 200-day moving average of $11.97 a share with high volume. Look for a sustained move or close above those levels with volume that hits near or above its three-month average volume of 3.12 million shares. If that breakout materializes soon, then FIO will set up to re-fill some of its previous gap-down-day zone from last October that started at $13.50 a share. If that gap gets filled with volume, then FIO could easily tag $14.50 to $15.50 a share.

Traders can look to buy FIO off weakness to anticipate that breakout and simply use a stop that sits right around major support at $10.32 a share. One can also buy FIO off strength once it starts to blast off above those breakout levels with volume and then simply use a stop that sits a conformable percentage from your entry point.

To see more stocks that could be setting up for monster short-squeezes, check out the Monster Short-Squeeze Plays portfolio on Stockpickr.

-- Written by Roberto Pedone in Delafield, Wis.


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Follow Stockpickr on Twitter and become a fan on Facebook.

At the time of publication, author had no positions in stocks mentioned.

Roberto Pedone, based out of Delafield, Wis., is an independent trader who focuses on technical analysis for small- and large-cap stocks, options, futures, commodities and currencies. Roberto studied international business at the Milwaukee School of Engineering, and he spent a year overseas studying business in Lubeck, Germany. His work has appeared on financial outlets including

CNBC.com and Forbes.com. You can follow Pedone on Twitter at www.twitter.com/zerosum24 or @zerosum24.


Monday, January 12, 2015

5 Hated Earnings Stocks You Should Love

DELAFIELD, Wis. (Stockpickr) -- Short-sellers hate being caught short a stock that reports a blowout quarter. When this happens, we often see a tradable short squeeze develop as the bears rush to cover their positions to avoid big losses. Even the best short-sellers know that it's never a great idea to stay short once a bullish earnings report sparks a big short-covering rally.

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This is why I scan the market for heavily shorted stocks that are about to report earnings. You only need to find a few of these stocks in a year to help enhance your portfolio returns -- the gains become so outsized in such a short time frame that your profits add up quickly.

That said, let's not forget that stocks are heavily shorted for a reason, so you have to use trading discipline and sound money management when playing earnings short-squeeze candidates. It's important that you don't go betting the farm on these plays and that you manage your risk accordingly. Sometimes the best play is to wait for the stock to break out following the report before you jump in to profit off a short squeeze. This way, you're letting the trend emerge after the market has digested all of the news.

Of course, sometimes the stock is going to be in such high demand that you risk missing a lot of the move by waiting. That's why it can be worth betting prior to the report -- but only if the stock is acting technically very bullish and you have a very strong conviction that it is going to rip higher. Just remember that even when you have that conviction and have done your due diligence, the stock can still get hammered if The Street doesn't like the numbers or guidance.

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If you do decide to bet ahead of a quarter, then you might want to use options to limit your capital exposure. Heavily shorted stocks are usually the names that make the biggest post-earnings moves and have the most volatility. I personally prefer to wait until all the earnings-related news is out for a heavily shorted stock and then jump in and trade the prevailing trend.

With that in mind, here's a look at several stocks that could experience big short squeezes when they report earnings this week.

Tableau Software

My first earnings short-squeeze trade idea is computer software player Tableau Software (DATA), which is set to release numbers on Tuesday after the market close. Wall Street analysts, on average, expect Tableau Software to report revenue of $258.50 million on earnings of 2 cents per share.

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Just recently, Goldman Sachs Group said it believes Tableau Software is well-positioned to benefit from Big Data analytic trends, and the firm upgraded shares to buy from neutral to reflect higher estimates and growth and raised its price target to $92 from $77 per share.

The current short interest as a percentage of the float for Tableau Software is pretty high at 9.2%. That means that out of the 15.93 million shares in the tradable float, 1.21 million shares are sold short by the bears. This is a high short interest on a stock with a very low tradable float. Any bullish earnings news could easily spark a monster short-squeeze for shares of DATA post-earnings.

From a technical perspective, DATA is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock has been uptrending strong over the last three months, with shares moving higher from its low of $58.96 to its recent high of $82.33 a share. During that uptrend, shares of DATA have been consistently making higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of DATA within range of triggering a near-term breakout trade post-earnings.

If you're bullish on DATA, then I would wait until after its report and look for long-biased trades if this stock manages to break out above its all-time high of $82.33 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 705,721 shares. If that breakout hits, then DATA will set up to enter new all-time-high territory, which is bullish technical price action. Some possible upside targets off that breakout are $95 to $100 a share.

I would simply avoid DATA or look for short-biased trades if after earnings it fails to trigger that breakout and then drops back below some near-term support levels at $74 to $72.40 a share with high volume. If we get that move, the DATA will set up to re-test or possibly take out its next major support levels at its 50-day moving average of $68.99 to $62 a share.

Alliance Fiber Optic Products

Another potential earnings short-squeeze play is semiconductor player Alliance Fiber Optic Products (AFOP), which is set to release its numbers on Monday after the market close. Wall Street analysts, on average, expect Alliance Fiber Optic Products to report revenue $22.68 million on earnings of 32 cents per share.

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The current short interest as a percentage of the float for Alliance Fiber Optic Products is very high at 12.4%. That means that out of the 12.56 million shares in the tradable float, 1.56 million shares are sold short by the bears. This is a large short interest on a stock with very low tradable float. If the bulls get the earnings news they're looking for, then shares of AFOP could easily spike sharply higher post-earnings as the bears rush to cover some of their positions.

From a technical perspective, AFOP is currently trending just above both its 50-day and 200-day moving averages, which is bullish. This stock has been uptrending a bit over the last two months, with shares moving higher from its low of $13.42 to its recent high of $17.81 a share. During that move, shares of AFOP have been making mostly higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of AFOP within range of triggering a major breakout trade post-earnings.

If you're in the bull camp on AFOP, then I would wait until after its report and look for long-biased trades if this stock manages to break out above some near-term overhead resistance levels at $17 to $17.81 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 549,548 shares. If that breakout hits, then AFOP will set up to re-test or possibly take out its next major overhead resistance levels at $21.50 to $23 a share.

I would simply avoid AFOP or look for short-biased trades if after earnings it fails to trigger that breakout and then drops back below its 200-day moving average of $14.89 a share to more key near-term support at $14.41 a share with high volume. If we get that move, then AFOP will set up to re-test or possibly take out its next major support levels at $13.42 to $12 a share, or even $10 a share.

Green Plains Renewable Energy

Another potential earnings short-squeeze candidate is Green Plains Renewable Energy (GPRE), a producer, marketer and distributer of ethanol, which is set to release numbers on Wednesday after the market close. Wall Street analysts, on average, expect Green Plains Renewable Energy to report revenue of $798.08 million on earnings of 40 cents per share.

>>4 Stocks Rising on Big Volume

Just recently, Stephens downgraded shares of Green Plains Renewable Energy to equal weight from overweight due to valuation and lack of visibility.

The current short interest as a percentage of the float for Green Plains Renewable Energy is extremely high at 33.5%. That means that out of the 21.83 million shares in the tradable float, 8.83 million shares are sold short by the bears. The bears have also been increasing their bets from the last reporting period by 8.8%, or by about 712,000 shares. If the bears get caught pressing their bets into a strong quarter, then shares of GPRE could easily explode higher post-earnings as the shorts jump to cover some of their trades.

From a technical perspective, GPRE is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock has been uptrending strong for the last two months and change, with shares moving higher from its low of $13.75 to its recent high of $22.66 a share. During that uptrend, shares of GPRE have been consistently making higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of GPRE within range of triggering a big breakout trade post-earnings.

If you're bullish on GPRE, then I would wait until after its report and look for long-biased trades if this stock manages to break out above its 52-week high at $22.66 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 886,113 shares. If that breakout hits, then GPRE will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that breakout are $27 to $30 a share.

I would avoid GPRE or look for short-biased trades if after earnings it fails to trigger that breakout and then drops back below some key near-term support at $20.75 a share with high volume. If we get that move, then GPRE will set up to re-test or possibly take out its next major support levels at its 50-day moving average of $18.87 a share to $18.02 a share. Any high-volume move below those levels will then put its 200-day moving average at $16.14 into range for shares of GPRE.

Outerwall

Another earnings short-squeeze prospect is automated retail solutions provider Outerwall (OUTR), which is set to release numbers on Thursday after the market close. Wall Street analysts, on average, expect Outerwall to report revenue of $595.34 million on earnings of $1.22 per share.

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Just recently, Northland Securities said it believes that revenue from Outerwall's Redbox business should be up 1.5% quarter-over-quarter, slightly above the firm's previous estimate of about $494 million. However, the firm warns that the company could provide cautious Q1 guidance due to the Winter Olympics, and it expects the company's Q1 revenue to miss the consensus estimate. Nonetheless the firm is sticking with its outperform rating and $78 a share price target on the stock.

The current short interest as a percentage of the float for Outerwall is extremely high at 31.1%. That means that out of the 21.13 million shares in the tradable float, 8.51 million shares are sold short by the bears. This is a monster short interest on a stock with a very low tradable float. Any bullish earnings news could easily spark a massive short-squeeze for shares of OUTR post-earnings.

From a technical perspective, OUTR is currently trending above its 200-day moving average and just below its 50-day moving average, which is neutral trendwise. This stock has been trending sideways and consolidating for the last four months, with shares moving between $61.22 on the downside and $72.09 on the upside. Any high-volume move above the upper-end of its recent sideways trading chart pattern could trigger a big breakout trade for shares of OUTR post-earnings.

If you're bullish on OUTR, then I would wait until after its report and look for long-biased trades if this stock manages to break out above its 50-day moving average of $66.70 to $70 a share and then once it clears more key resistance levels at $70.44 to its 52-week high at $72.09 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 528,589 shares. If that breakout hits, then OUTR will set up to enter new 52-week-high territory above $72.09, which is bullish technical price action. Some possible upside targets off that breakout are $80 to $90 a share.

I would simply avoid OUTR or look for short-biased trades if after earnings it fails to trigger that breakout and then drops back below some key near-term support levels at $63 to its 200-day moving average of $61.11 a share with high volume. If we get that move, then OUTR will set up to re-test or possibly take out its next major support levels at $58 to $52 a share.

Twitter

My final earnings short-squeeze play is social media player Twitter (TWTR), which is set to release numbers on Wednesday after the market close. Wall Street analysts, on average, expect Twitter to report revenue of $217.78 million on a loss of 2 cents per share.

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Just this morning, RBC Capital analyst Mark Mahaney said Twitter's fourth quarter results could exceed analysts' consensus by a small amount, although it is difficult to gauge the company's fundamentals. Also this morning, Wedbush analyst Shyam Patil said that Twitter benefited from strong spending on its platform last quarter and some advertisers are beginning to dedicate a set amount of money to Twitter in their budgets. However, Patil said Twitter's fourth quarter results are likely to be in-line with analysts' consensus estimates, and investors should wait for a better entry point before buying the shares.

The current short interest as a percentage of the float for Twitter is very high at 15%. That means that out of the 284.36 million shares in the tradable float, 32.69 million shares are sold short by the bears. The bears have also been increasing their bets from the last reporting period by 11.3%, or by about 3.31 million shares. If the bears get caught pressing their bets into a bullish quarter, then shares of TWTR could rip sharply higher post-earnings as the bears rush to cover some of their bets.

From a technical perspective, TWTR is currently trending above its 50-day moving average, which is bullish. This stock recently formed a double bottom chart pattern at $55.59 to $56.10 a share. Following that bottom, shares of TWTR have started to uptrend and break out above some near-term overhead resistance at $64.69 a share. That move is quickly pushing shares of TWTR within range of triggering an even bigger breakout trade post-earnings into new all-time-high territory.

If you're in the bull camp on TWTR, then I would wait until after its report and look for long-biased trades if this stock manages to break out above some key near-term overhead resistance levels at $70.43 a share to its all-time high at $74.73 a share with high volume. Look for volume on that move that hits near or above its three-month average volume of 21.88 million shares. If that breakout hits, then TWTR will set up to enter new all-time-high territory, which is bullish technical price action. Some possible upside targets off that breakout are $80 to $90 a share.

I would avoid TWTR or look for short-biased trades if after earnings it fails to trigger that breakout, and then drops back below some near-term support at $60 a share with high volume. If we get that move, then TWTR will set up to re-test or possibly take out its next major support levels at those double bottom prices of $56.10 to $55.59 a share.

To see more potential earnings short squeeze plays, check out the Earnings Short-Squeeze Plays portfolio on Stockpickr.

-- Written by Roberto Pedone in Delafield, Wis.


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Follow Stockpickr on Twitter and become a fan on Facebook.

At the time of publication, author had no positions in stocks mentioned.

Roberto Pedone, based out of Delafield, Wis., is an independent trader who focuses on technical analysis for small- and large-cap stocks, options, futures, commodities and currencies. Roberto studied international business at the Milwaukee School of Engineering, and he spent a year overseas studying business in Lubeck, Germany. His work has appeared on financial outlets including

CNBC.com and Forbes.com.

You can follow Pedone on Twitter at www.twitter.com/zerosum24 or @zerosum24.