Thursday, June 18, 2015

The Heavy Price of Stockpicking

The tab for speculating in the stock market is about 4% a year, according to the calculation of one influential wealth manager. That’s a harsh penalty to pay when the S&P 500’s average annual result over the past 15 years is barely above that amount, at 4.28%.

Eric NelsonEric Nelson of Servo Wealth Management goes through the grim numbers in his July newsletter to clients.

The Oklahoma City-based registered investment advisor and Dimensional Fund Advisors loyalist starts his analysis at the professional money manager level, arguing that their performance as measured against indexes shows they lack market-beating skill.

Unlike top athletes or surgeons who demonstrate superior abilities, Nelson’s scorecard reveals that just 20% of fund managers beat their index from 2008 to 2012 and that the number who did so in most categories closely matched the number of mutual funds that were outright closed “due to horrendous underperformance.”

For example, 24.6% of active large-cap funds beat their index during that period, while 27.7% of active large-cap funds were shut down. The category that exhibited the least correspondence was not to the credit of professional managers: Just 9.6% of active short-term bond funds beat their index—far less than the 21.7% of such funds that closed during that period.

Nelson attributes manager selection to a Lake Wobegon mentality that assumes their manager is better than average. Yet he argues that people select their better-than-average managers based on past performance that doesn't persist.

Nelson cites data from Standard & Poor's showing the performance of the top managers from 2003 to 2007 in the subsequent five-year period from 2008 to 2012. Just 24.1% of top quartile managers remained in the top quartile, whereas 19.3% fell to the second quartile, 20.3% to the third quartile and 23.1 dropped to the last quartile; the missing 13.3% lost their jobs as their funds were shut down.

The wealth manager concludes: “So even when narrowing the search for a professional active manager to only those who have previously produced the best results, we still find the chance of future index-beating returns is no better than choosing at random (by chance, we’d expect to have 1/4 odds of landing in each of the four quartiles, and a bit less when we consider the odds of disappearing completely).”

Nelson notes there are actually greater odds (nearly 37%) of a top fund falling to the bottom quartile or disappearing than remaining in the top quartile (24%).

The professional advisor emphasizes that this poor performance emanates from people with chartered financial analyst (CFA) designation and Ivy League MBAs.

“If they can’t get it right," he asks, "what is the chance that a do-it-yourself investor running a Charles Schwab or Morningstar stock screener for a few hours in the evening or on the weekends will perform better?”

Drilling down further, Nelson next takes a page out of John Bogle’s book, literally, and considers both the underperformance of active managers and bad investor behavior.

Bogle’s The Clash of the Cultures shows that large-cap funds returned 4.1% to investors from 1997 to 2011, compared with 5.4% for their S&P 500 benchmark. While the numbers are both small, Nelson points out that that means 37% less wealth over 15 years for active fund investors, and 72% less wealth over the same time period compared to the wealth managers’ clients invested in his favorite DFA US Large Value Fund (DFLVX).

“But even this dismal result is too generous,” Nelson says, since naughty investors typically dump poor-performing funds for those with recent good performance, which subsequently perform poorly, which “amplifies the return deficit.”

Citing Bogle again, Nelson shows that investor returns trail fund returns by nearly 2% on average.

“So between poor professional management and bad investor behavior, the total cost speculators pay is almost 4% per year!” Nelson says in summary, calling on investors to save their wealth through the discipline of a fee-only investment advisor.

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Check out Your Move, Bogleheads: Advisor Finds DFA’s Returns Trump Vanguard’s.

Wednesday, June 17, 2015

ETF Pop Quiz: Hong Kong, Healthcare, and Home Depot

After another week in the global market, the ETFdb pop quiz returns with another round of questions about Hong Kong, Healthcare, and Home Depot.

As always, all answers can be found using the suite of free tools at ETFdb.com, including the ETFdb Categories, ETF screener and the ETF Analyzer.



1. Which Hong Kong ETF has the lowest expense ratio?

2. Which Real Estate ETF has the highest average daily trading volume?

3. Which Healthcare ETF has the most assets under management, Vanguard's Health Care Index FUnd (VHT) or iShares' Dow Jones US Healthcare Sector Index Fund (IYH)?

4. Which PIMCO ETF has the highest year-to-date return?

5. Which ETF has the highest exposure to Home Depot (HD)?

Also test your knowledge with our past Pop Quizzes

Gold, GBP, and Gaming

Food, Futures Based, and France

Energy, Engineering, and Emerging Market Bonds

Disclosure: No positions at time of writing.

Monday, June 15, 2015

How Bitcoin Works

Bitcoin is a digital currency that exists almost wholly in the virtual realm, unlike physical currencies like dollars and euros. A growing number of proponents support its use as an alternative currency that can pay for goods and services much like conventional currencies. Bitcoin is the first and easily the most popular cryptocurrency, or currency that uses cryptography1 (see "Definitions and Key Concepts" at end of article) to control its creation, administration and security.

Bitcoin was set up in 2009 by a mysterious individual or group with the pseudonym Satoshi Nakamoto, whose true identity is yet to be revealed and who left the project in 2010. It rocketed to prominence in 2013, when the value of a Bitcoin soared more than 10-fold in a two-month period, from $22 in February to a record $266 in April. At its peak, based on more than 10 million bitcoins issued, the cryptocurrency boasted a market value of over $2 billion.

Bitcoin Versus Conventional Currencies
Bitcoin differs from conventional currencies in some very fundamental ways, as noted below (for the sake of simplicity, we use the U.S. dollar as a proxy for conventional currencies). Bitcoin uses P2P technology without a central authority: Bitcoin is a decentralized currency managed by peer-to-peer technology (P2P2), without a central authority. All functions such as Bitcoin issuance, transaction processing and verification are carried out collectively by the network, without a central supervisor or agency to oversee operations. In contrast, a conventional currency is issued by a central bank as part of its mandate to manage national monetary policy. In the U.S., only the Federal Reserve has the power to issue dollars; it is also the central authority that conducts monetary policy, supervises banks, maintains financial system stability, and provides financial services to depository institutions. Bitcoin is primarily digital: Although physical Bitcoins are available from companies such as Casascius and BitBills, Bitcoin has been designed primarily to be a digital currency. Physical Bitcoins are somewhat of a novelty, and the very idea of a tangible form defeats the purpose of a digital currency, according to the most ardent supporters of the concept. Conversely, your dollars exist primarily in physical form; the balances that you hold at your bank and online brokerage can be converted into physical dollars within minutes if you so desire. Bitcoin has a maximum 21 million limit: The total number of Bitcoins that will be issued is capped at 21 million. The Bitcoin "mining"3 process presently creates 25 Bitcoins every 10 minutes (the number created will be halved every four years), so that limit will not be reached until the year 2140. While Bitcoin critics argue that the maximum limit is not large enough, supporters maintain that since each Bitcoin is divisible to eight decimal places, the number of fractional Bitcoins (called "satoshis") – at 21 x 1014 – will be more than enough for all conceivable applications. Conventional currencies, on the other hand, can be issued without limit. Bitcoin is a complex product: The concepts of cryptocurrencies in general are abstruse and abstract, and understanding how and why Bitcoin works requires a fair degree of technological knowledge. Bitcoin has limited acceptance: It has limited acceptance so far and cannot be used at brick-and-mortar storefronts, although that may eventually change if it continues to gain traction. The dollar, on the other hand, has near-universal acceptance as the world's global reserve currency. Bitcoin transactions have limitations: A Bitcoin transaction can take as long as 10 minutes to confirm. Transactions are also irreversible and can only be refunded by the Bitcoin recipient. These limitations do not exist with conventional currencies, where debit and credit transactions are confirmed within seconds; certain transactions can also be reversed for valid reasons by the originator, without having to rely on the recipient's largesse. Bitcoin balances are not insured: This means that if you lose your Bitcoins for any reason – for example, your hard drive crashes, or a hacker steals the digital wallet in which your Bitcoins are stored, or the Bitcoin exchange where you held a balance went out of business – you have little recourse. Currency balances held at banks, on the other hand, are insured against certain events such as bank failure by agencies like the Federal Deposit Insurance Corporation in the U.S. How Bitcoin Works
Let's say you want to test the Bitcoin waters. The first thing you need to do as a new user is install a digital wallet on your computer or mobile device. This wallet is simply a free, open-source software program that will generate your first and subsequent Bitcoin addresses. There are three types of wallets – a software wallet (installed on your computer), a mobile wallet (which resides on your mobile device) or a Web wallet (located on the website of a service provider that hosts bitcoins).

Bitcoin uses public key encryption4 techniques for security. This means that when a new Bitcoin address is created, a cryptographic key pair consisting of a public key and private key – which are essentially unique, long strings of letters and numbers – is generated.

Each address has its own Bitcoins balance, so all you need to do is acquire a number of Bitcoins that will be held at one of the addresses in your wallet. You can acquire Bitcoins through a number of ways – by buying them from a Bitcoin currency exchange such as Mt. Gox or Bitstamp, or through a service like BitInstant that enables fund transfers between Bitcoin exchanges and supports various payment mechanisms.

Note that all Bitcoin transactions are stored publicly and permanently on the Bitcoin network, which means that the balance and transactions of any Bitcoin address are visible to anyone. Experts therefore recommend that Bitcoin owners create a new address for each transaction as a means of ensuring privacy and enhancing security.

Once you have created a Bitcoin address and have acquired Bitcoins, you can use them for an online transaction with a company that accepts Bitcoins as a payment mode. The company will send you the Bitcoin address to which you can send your Bitcoin payment. You direct the payment to that address; while the transaction takes place within seconds, verification can take 10 minutes or longer.

All Bitcoin transactions, without exception, are included in a shared public transaction log known as a "block chain". This is to confirm that the party spending the Bitcoins really owns them, and also to prevent fraud and double-spending.5

Why does transaction verification or confirmation take so long? Because the complex algorithms involved in Bitcoin mining (see description below) take time to solve, even with immense computing power at one's disposal.

An Example of a Bitcoin Transaction
Let's assume you want to make an online payment to a company – call it BitChamp – using 5 Bitcoins that you have in an address in your digital wallet. Here are the steps in the transaction: BitChamp creates a new Bitcoin address and directs you to send your payment to it. This creates a private key (known only to BitChamp) and a public key (available to you and anyone else). Note that just as a seller does not need to know your physical identity if you pay cash, you do not need to disclose your real identity to BitChamp and can remain anonymous. You instruct your Bitcoin client (the free Bitcoin software you first installed on your computer) to transfer 5 Bitcoins from your wallet to the BitChamp address. This is the transaction message. Your Bitcoin client will electronically "sign" the transaction request with the private key of the address from where you are transferring the Bitcoins. Recall that your public key is available to anyone for signature verification. Your transaction is broadcast to the Bitcoin network and will be verified in a few minutes. The 5 Bitcoins have been successfully transferred from your address to the BitChamp address. Note that only the first two steps involve action by the seller and you respectively. The latter two steps are automatically executed by the Bitcoin client software and Bitcoin network. As well, storing the private key attached to an address safely and securely is of the utmost importance; otherwise, anyone who obtains the private key can control the Bitcoins at that address and use them fraudulently.

Bitcoin Pros and Cons
Bitcoin has a number of advantages: As the first cryptocurrency to capture the public imagination, Bitcoin has "first mover" advantage and a head start over the competition. Total issuance is limited to 21 million, so it is unlikely to be devalued because of the prospect of a massive influx of new bitcoins. As a decentralized currency, Bitcoin is free from government interference and manipulation. Transaction costs are much lower than with conventional currencies. On the flip side, Bitcoin's disadvantages include: The price of a Bitcoin has been increasingly volatile, making it difficult to assess its real value and increasing the risk of losses for investors in the cryptocurrency. The relative anonymity of Bitcoin may encourage its use for illegal and illicit activities such as tax evasion, weapons procurement, gambling and circumvention of currency controls. The fact that bitcoins exist primarily in digital form renders them vulnerable to loss. Conclusion
Bitcoin has made significant progress in its adoption and usage since it was unveiled in 2009. Its evolution over the next few years will determine whether this leading cryptocurrency will become an integral part of the global financial system, or whether it is destined to remain a niche player.

Definitions and Key Concepts

1 Cryptography refers to the practice and technique of using encryption for secure communication and transmission of data and information.

2 In a P2P network, a group of computers is connected to enable the sharing of resources and information by users, and there is no central location for the network. This is diametrically opposed to a typical client-server network, where the central server controls the level of access by users to shared network resources. Popular applications of the P2P concept are Skype and file-sharing services such as BitTorrent.

3 Bitcoin mining refers to the computationally-intensive task of generating Bitcoins. While any computer can be put to the task of Bitcoin mining by using a free mining application, in reality a great deal of computing power is required to solve the extremely complex algorithms involved and to share those solutions with the entire Bitcoin network. The mining process is quite complicated and involves advanced concepts such as cryptographic hashes and nonces.

In simple terms, Bitcoin miners use powerful computers to track and compile pending Bitcoin transactions every 10 minutes into a new block. These miners then set to work doing the intensive number-crunching required to verify all the transactions in the block. This is a competitive process, and the first miner to solve the algorithms and verify the transactions transmits the results to the entire Bitcoin network. Upon confirmation by the rest of the network, the block is then added to the block chain. Each block includes a certain number of Bitcoins in a "coinbase" transaction that is paid out to the successful miner. This reward was set at 50 Bitcoins when the system first commenced operations in 2009, but was halved to 25 Bitcoins in November 2012, and will reduce by 50% approximately every four years.

4 Public key encryption combines a public key and a private key. While the public key is available to anyone, the matching private key is stored securely in the digital wallet and is generally password-protected. Each Bitcoin transaction is signed by the private key of the initiating user, providing mathematical proof that it has indeed originated from the owner of the address, and preventing the transaction from being altered once it has been issued. Since the key pair is mathematically related, any data or information encrypted with a private key may only be decrypted or deciphered with the corresponding public key and vice versa.

5 Double-spending means spending the same digital currency twice, something that is impossible with physical currencies.

Tuesday, June 9, 2015

Ford's Attempt to Revive Europe Sales


Ford's Escape/Kuga looks to help revive sales in Europe. Photo Courtesy of Ford.

It's been a great couple months for Ford (NYSE: F  ) and its investors; we've witnessed the stock price almost reach $16 as of Thursday. It's come a long way from its 52-week low of $8.82, much to the delight of Ford investors. One of the major remaining overhangs on the stock is losses in Europe, and when the company manages to improve the situation in the region, we could witness yet another positive catalyst for the stock price. I'll explain management's expectations, and how Ford is attempting to boost sales in Europe.

By the numbers
In the first quarter, General Motors (NYSE: GM  ) announced it had lost $175 million in Europe, which was an improvement from last year's first quarter, but still added to a staggering grand total of about $18 billion. While Ford's total losses aren't nearly as massive as GM's, it still has work to do; its first quarter losses hit about $462 million in Europe and it still expects to lose $2 billion this year. In a region where many countries face 20% unemployment or worse, people simply aren't jumping to buy cars.

Management from GM and Ford both hope to see the region stabilize in 2014, allowing both to break even around mid-decade. Until then, both will be cutting costs and capacity at numerous plants.

According to USA Today, Ford estimates that closing its plant in Belgium at the end of 2014 will cost roughly $750 million in cash expenditures. Ford is also closing two other plants in U.K. and will attempt to lower its overall capacity.

Ford isn't falling into the same trap we saw during the U.S. financial crisis where automakers dished out thousands of dollars in incentives in an attempt to maintain market share. Rather it's boosting its advertising and conceding market share to keep losses from growing substantially.

Advertising campaign
As Ford increases its overall advertising budget for Europe, it plans to keep its TV and print spending flat this year, according to AutoNews Europe. The increase will be felt in its digital platforms, which includes social media – a budget increase from 15% in 2012 to 35% in 2014.

The campaign is attempting to call out one specific technology feature per model, attracting different target markets. The Fiesta, which has done well attracting younger consumers, is going to feature the ability to link a smartphone to Ford's Sync entertainment system.

Ford's Escape has sold extremely well in the U.S. and has a chance to top 300,000 units sold for 2013 – a rare feat for Ford vehicles other than the F-Series. It's been welcomed with very positive reviews in China, and Ford expects it to be the most successful of its Europe advertising during the Champions League finale concluded last weekend.

"We think the audience is very close to the people we want to reach for the Kuga and SUVs in general," Elena Cortesi, Ford of Europe director of earned and social media, told AutoNews Europe, "and we're explaining the car mainly through the automatic tailgate."

Bottom line
It's been a nice ride for Ford's stock price recently, but two years from now if the company can break even in Europe it could send an additional $2 billion straight to bottom-line profits. That would clearly be a huge positive catalyst for the stock price. It's also reassuring to see that management has learned from mistakes made during the U.S. financial crisis and the ensuing recession, and is not resorting to massive incentives to sell vehicles.

I like the strategy to increase advertising and build its brand while conceding some market share to stabilize losses. Overall, things look bright for Ford and its investors, and the market is finally taking notice.

If you're concerned that Ford's turnaround has run its course, relax – there's good reason to think that the Blue Oval still has big growth opportunities ahead. We've outlined those opportunities in detail, in the Fool's premium Ford research service. If you're looking for some freshly updated guidance to Ford's prospects in coming years, you've come to the right place – click here to get started now.

Monday, June 8, 2015

Microsoft's Biggest Product Since Windows 95

While one tech titan was defending its (lack of) tax payments to the United States Senate, another introduced its first truly cutting-edge product in many moons. Tuesday saw the unveiling of Microsoft's (NASDAQ: MSFT  )  Xbox One. Now, this isn't your 12-year-old nephew's gaming console, it's a formidable and first-of-its-kind effort to create an interactive, all-encompassing home entertainment set-top box. While gamers and game-makers will rejoice with news of a new, top-of-the-line console, investors should be tingling with excitement -- because this may be the most compelling thing to come out of Redmond since Windows 95.

Big claim
The above paragraph has some lofty statements, I know. Moreover, I have not seen one of the machines in person nor witnessed firsthand its capability. To top it off, after Tuesday's announcement, Microsoft's stock remained nearly unchanged. Apparently Wall Street was unmoved by the highly anticipated unveiling. Competitor Sony soared nearly ten points, though the move was not related, as some outlets reported.

Still, am I wrong to believe that this new system is something worth cheerleading?

Feature-rich
Let's not dwell on specs that mean nothing to most of us -- one can assume this gaming console has fantastic graphics and will be comparable to the coming Sony Playstation 4. A fancy graphics processor isn't going to send Microsoft back to its glory days of relevancy, anyway.

But the Xbox One does have plenty of headline-worthy features. For one, the console allows for split-screen gaming, television watching, Skype video calling, and more. This is something smart TVs have been trending toward, but haven't quite made the leap. The Xbox One, though not a TV, is the first device we have seen to offer full split-screen functionality. Users can play Call of Duty while talking to Grandma via Skype. While you are watching Iron Man via Netflix streaming on your Xbox One, you can simultaneously Google (I mean, Bing?) how much Robert Downey Jr. is paid for each film, and why that'll never happen to you. The possibilities are endless! But seriously, this feature has important implications for the future of TV-based content consumption.

Ad me!
Cable companies and their advertisers are concerned with the increasing inefficacy of commercia  breaks. For one, we have devices that enable us to skip ads entirely. But even when they are on our TVs, we are more and more likely to mute the TV and pick up our iPads. A three-minute dedicated commercial run just isn't hacking it anymore. With split-screen, multifunctioning abilities, Microsoft can offer advertisers a unique (and likely more effective) way to reach out to viewers, engaging them throughout the viewing process.

Talkies
Another big deal regarding the Xbox One is its enhanced Kinect and voice control properties. In this light, the device sounds like it has achieved much of what everyone has constantly speculated that Apple will/would/should achieve with its eventual Apple TV. Siri-like interaction with the Xbox One will allow users to manage everything from "power on" to "watch ESPN." That's right, the days of the overwhelmingly blue TV guide menu will soon be a thing of the past -- at least for Xbox One owners.

A real product
Though a fan of Microsoft as a stock, I have rarely been impressed with a product offering from the company. It nearly always seems as if the Redmond-based company is putting out afterthought, catch-up products that still aren't as good as a certain Cupertino competitor's.

The Xbox One seems different. It is much, much more than a gaming console, and has implications for the future of television, all while putting Microsoft deep in the game.

Of course, we'll know more as time goes on, and it will be interesting to see what Sony throws out on June 10th for its PS4 unveiling. But for a first impression, well, I'm impressed.

More from The Motley Fool
It's been a frustrating path for Microsoft investors, who've watched the company fail to capitalize on the incredible growth in mobile over the past decade. However, with the release of its own tablet, along with the widely anticipated Windows 8 operating system, the company is looking to make a splash in this booming market. In a new premium report on Microsoft, a Motley Fool analyst explains that while the opportunity is huge, so are the challenges. The report includes regular updates as key events occur, so make sure to claim a copy of this report now by clicking here.

Infinera vs. Ciena: Who Will Win the Multimillion-Dollar Deal With Level 3 Communications?

At risk of losing U.S. partnerships, Level 3 Communications  (NYSE: LVLT  ) may soon strike a multimillion-dollar, three-year optical networking deal with Infinera  (NASDAQ: INFN  ) or Ciena  (NASDAQ: CIEN  ) .

While Level 3 seemed satisfied with Huawei's networking equipment for years, that all changed in the past few months. In March and in April, both President Obama and House Intelligence Committee Chairman Mike Rogers (R-Mich.) have made it harder for Huawei to operate in the U.S. It's only a matter of time until Level 3 -- and it's Huawei equipment -- finds it difficult to do business in the U.S.

Soon, Level 3 will probably go the way of AT&T and Verizon and spurn Huawei's equipment. That leaves open a huge multimillion-dollar, multi-year deal wide open. The two companies likely to fill the void are U.S.-based Infinera or Ciena.

So, who will Level 3 choose? In the video below, Motley Fool contributor Kevin fills you on which company will prevail. The reason might surprise you.

The mobile revolution is still in its infancy, but with so many different companies it can be daunting to know how to profit in the space. Fortunately, The Motley Fool has released a free report on mobile named "The Next Trillion-Dollar Revolution" that tells you how. The report describes why this seismic shift will dwarf any other technology revolution seen before it and also names the company at the forefront of the trend. You can access this report today by clicking here -- it's free.

Thursday, June 4, 2015

How Earnings at United Technologies Will Fare

On Tuesday, United Technologies (NYSE: UTX  ) will release its latest quarterly results. The key to making smart investment decisions on stocks reporting earnings is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you'll be less likely to make an uninformed knee-jerk reaction to news that turns out to be exactly the wrong move.

A member of the Dow Jones Industrials (DJINDICES: ^DJI  ) , United Technologies has a wide range of businesses under its roof, ranging from elevator manufacturing to heating and cooling systems for institutional customers. But aerospace has become the company's bread and butter, and it will continue to gain importance into the future. Let's take an early look at what's been happening with United Technologies over the past quarter and what we're likely to see in its quarterly report.

Stats on United Technologies

Analyst EPS Estimate

$1.30

Change From Year-Ago EPS

(0.8%)

Revenue Estimate

$14.94 billion

Change From Year-Ago Revenue

20.2%

Earnings Beats in Past 4 Quarters

4

Source: Yahoo! Finance.

Will United Technologies be able to keep earnings up this quarter?
Analysts have recently upgraded their views on United Technologies and its earnings prospects, with an increase in their consensus for the just-ended quarter by $0.02 per share. They've also bumped up full-year 2013 estimates by triple that amount, helping to send the stock to all-time record highs and gain almost 10% just since mid-January.

United Tech has continued to move forward after having completed its acquisition of aircraft component maker Goodrich last year, focusing more heavily on the aerospace industry. In recent months, United Tech has made several asset sales on non-core divisions, with the latest coming last month when it sold its electrical power systems unit to France's Safran for $400 million.

But on the defense front, United Tech could see pressure from the end of some successful programs. Earlier this month, the company said that it had successfully completed its production of F117 engines for the Air Force's fleet of C-17 aircraft and expects to shift to a much slower pace to provide spare replacement engines as needed. With tough conditions in the Defense Department, it'll be harder than ever for United Tech to replace maturing contracts with new business.

Still, the commercial aircraft space holds huge promise for United Tech. The company's Pratt & Whitney engine manufacturer has a long-standing relationship with Boeing (NYSE: BA  ) , which itself has projected trillions of dollars of orders for commercial aircraft over the next 20 years. But United Tech has also branched out beyond Boeing, with the announcement last month that it will supply a range of components, including engines, electrical systems, and brake systems, for Embraer (NYSE: ERJ  ) . Given the E-Jets manufacturer's strong growth in the face of Latin American expansion, Embraer has great promise, and United Tech is smart to latch onto it.

In United Tech's earnings report, watch for ongoing signs of how well the integration of the Goodrich acquisition is going. After such a massive buyout, it can take a long time for the corporate culture to gel back into place, but United Tech has such strong prospects that it should be able to get everyone behind its profit opportunities.

United Tech relies on Boeing for a big part of its business. But will Boeing live up to its full potential? In our premium research report on the company, two of The Motley Fool's best minds on industrials have collaborated to provide investors with the key, must-know issues surrounding Boeing. They'll be updating the report as key news hits, so don't miss out -- simply click here now to claim your copy today.

Click here to add United Technologies to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.

Tuesday, June 2, 2015

3 Biotech Stocks Under $10 in Breakout Territory

DELAFIELD, Wis. (Stockpickr) -- At Stockpickr, we track daily portfolios of stocks that are the biggest percentage gainers and the biggest percentage losers.

Must Read: 5 Hated Earnings Stocks You Should Love

Stocks that are making large moves like these are favorites among short-term traders because they can jump into these names and try to capture some of that massive volatility. Stocks that are making big-percentage moves either up or down are usually in play because their sector is becoming attractive or they have a major fundamental catalyst such as a recent earnings release. Sometimes stocks making big moves have been hit with an analyst upgrade or an analyst downgrade.

Regardless of the reason behind it, when a stock makes a large-percentage move, it is often just the start of a new major trend -- a trend that can lead to huge profits. If you time your trade correctly, combining technical indicators with fundamental trends, discipline and sound money management, you will be well on your way to investment success.

With that in mind, let's take a closer look at a several stocks under $10 that are making large moves to the upside.

Must Read: 5 Rocket Stocks Ready to Bounce Higher

Novavax

Novavax (NVAX), a clinical-stage biopharmaceutical company, focuses on discovering, developing and commercializing recombinant protein nanoparticle vaccines and adjuvants. This stock closed up 3.1% to $4.33 in Tuesday's trading session.

Tuesday's Range: $4.18-$4.59

52-Week Range: $2.68-$6.95

Tuesday's Volume: 6.68 million

Three-Month Average Volume: 2.94 million

From a technical perspective, NVAX spiked sharply higher here right above some near-term support at $4 with heavy upside volume flows. This spike briefly pushed shares of NVAX into breakout territory above $4.35 and back above its 50-day moving average of $4.49. Shares of NVAX tagged an intraday high of $4.59, before closing just below that level at $4.33. Market players should now look for a continuation move to the upside in the short-term if NVAX manages to take out Tuesday's intraday high of $4.59 with high volume.

Traders should now look for long-biased trades in NVAX as long as it's trending above some key near-term support at around $4 and then once it sustains a move or close above $4.59 with volume that hits near or above 2.94 million shares. If that move develops soon, then NVAX will set up to re-test or possibly take out its next major overhead resistance levels at its 200-day moving average of $4.82 to $5, or even $5.20 to $5.50.

Must Read: 4 Stocks Spiking on Unusual Volume

OxiGene

OxiGene (OXGN), a clinical-stage biopharmaceutical company, develops therapeutics primarily to treat cancer. This stock closed up 6.8% to $2.33 in Tuesday's trading session.

Tuesday's Range: $2.22-$2.38

52-Week Range: $1.96-$5.40

Tuesday's Volume: 1.75 million

Three-Month Average Volume: 350,305

From a technical perspective, OXGN ripped sharply higher here back above its 50-day moving average of $2.25 with heavy upside volume flows. This stock recently formed a double bottom chart pattern at $2.08 to $2.06. Since forming that bottom, shares of OXGN have started to spike sharply higher and it's quickly approaching a near-term breakout trade. That trade will hit if OXGN manages to take out Tuesday's intraday high of $2.38 to more near-term overhead resistance at $2.45 with high volume.

Traders should now look for long-biased trades in OXGN as long as it's trending above some near-term support at $2.10 or above those double bottom support levels and then once it sustains a move or close above those breakout levels with volume that hits near or above 350,305 shares. If that breakout hits soon, then OXGN will set up to re-test or possibly take out its next major overhead resistance levels at $2.57 to its 200-day moving average of $2.65. Any high-volume move above those levels will then give OXGN a chance to tag $2.80 to $3, or even $3.20.

Must Read: 5 Stocks Ready for Breakouts

Sinovac Biotech

Sinovac Biotech (SVA), a biopharmaceutical company, is engaged in the research, development, manufacture and commercialization of vaccines for hepatitis A, hepatitis B and influenza viruses in the People's Republic of China. This stock closed up 2.5% to $4.89 in Tuesday's trading session.

Tuesday's Range: $4.67-$5.01

52-Week Range: $4.51-$8.14

Tuesday's Volume: 230,000

Three-Month Average Volume: 197,755

From a technical perspective, SVA bounced notably higher here right above its new 52-week low of $4.51 with above-average volume. This spike to the upside on Tuesday is quickly pushing shares of SVA within range of triggering a near-term breakout trade. That trade will hit if SVA manages to take out some near-term overhead resistance levels at $5.14 to its 50-day moving average of $5.22 with high volume.

Traders should now look for long-biased trades in SVA as long as it's trending above its new 52-week low of $4.51 and then once it sustains a move or close above those breakout levels with volume that hits near or above 197,755 shares. If that breakout hits soon, then SVA will set up to re-test or possibly take out its next major overhead resistance levels at $5.69 to $5.80, o even its 200-day moving average at $5.99 to $6.03.

Must Read: Warren Buffett's Top 10 Dividend Stocks

To see more stocks that are making notable moves higher, check out the Stocks Under $10 Moving Higher portfolio on Stockpickr.

-- Written by Roberto Pedone in Delafield, Wis.


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>>3 Big Stocks Breaking Out on Big Volume



>>5 Dividend Stocks About to Hike Payments to Shareholders



>>5 Foreign Stocks to Buy for Gains at Home

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, June 1, 2015

The Week's Winners and Losers: GoPro Pops, Aereo Drops

APTOPIX Wall Street GoPro IPO Seth Wenig/APCEO Nick Woodman holds a GoPro camera in his mouth as he celebrates his GoPro's IPO. There were plenty of winners and losers this week, as the leading premium coffeehouse chain expanded its carbonated beverage offerings, and a disruptive video-streaming service got disrupted itself. Here's a rundown of the week's best and worst. GoPro (GPRO) -- Winner The initial public offering market got some fresh meat on Thursday when GoPro went public. The company behind the popular namesake cameras that extreme sports enthusiast like to wear was a hit. It priced at $24 a share -- at the high end of its initial range -- and that still wasn't enough. The stock opened at $28.65, closing out its first day of trading with a 31 percent gain. GoPro's growth has been stellar. Sales soared 87 percent last year to nearly hit $1 billion. However, there was a surprising decline in revenue during this year's first quarter. New GoPro investors are assuming that the most recent quarter's dip was a fluke. If it isn't a fluke, they can record their stumble in glorious high-def. Aereo -- Loser Sometimes it's the disruptor that gets disrupted. Aereo, the start-up service that offers local TV channels as a streaming platform, was pummeled by the U.S. Supreme Court. In a 6-3 decision, the court ruled that Aereo violated the copyrights of major TV networks by streaming their content without paying transmission fees. The move isn't the end for Aereo, but its prognosis has clearly deteriorated. Aereo thought that incorporating tiny remote antennas that subscribers can access online was similar enough to actual HD antenna ownership by individuals that its business model would be found to be legal. That didn't pan out, and consumers are unlikely to get a break this way from their ever-increasing cable and satellite TV bills. Starbucks (SBUX) -- Winner If you need to cool down in the Sun Belt, Starbucks has a few fizzy options. The java giant this week introduced its Fizzio line of carbonated beverages at 3,000 of its stores in the South. Fizzio is a line of handcrafted sodas that launched with three flavors (root beer, ginger ale and lemon ale), at 100 calories or less for 16 ounces. (Half as many calories as a Pepsi, and with cane sugar as the sweetener.) Starbucks is also letting customers pay 50 cents to have their iced teas and Refreshers beverages carbonated with the Fizzio machine. It's a smart call, giving non-coffee drinkers a new reason to walk into Starbucks. Steelcase (SCS) -- Loser Office furniture sales can be a good proxy by which to gauge the state of corporate America, but investors better hope that Steelcase is the exception.