Filed under: Major movement, Options, Technical Analysis, Goldcorp Inc (GG), Commodities

Goldcorp Inc. (NYSE: GG) shares are rising today after gold futures rose to $1000 for the first time ever. Gold prices have received support from a weaker dollar, which has recently hit lows against multiple currencies. If you think that the company won’t fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on GG.

After hitting a one-year low of $21.00 in August, the stock hit a one-year high today. GG opened this morning at $43.94. So far today the stock has hit a low of $43.94 and a high of $44.95. As of 12:20, GG is trading at $44.63, up $1.63 (3.8%). The chart for GG looks bullish and steady.

For a bullish hedged play on this stock, I would consider a July bull-put credit spread below the $30 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn’t do what you think but still leverage nice returns. This particular trade will make an 8.7% return in just four months as long as GG is above $30 at July expiration. Goldcorp would have to fall by more than 32% before we would start to lose money.

GG hasn’t been below $30 since September and has shown support around $35 recently. This trade could be risky if the price of gold drops, but even if that happens, this position could be protected by the support the stock might find at its 50- and 200-day moving averages, which are around $38 and $31 respectively.

Brent Archer is an options analyst and writer at Investors Observer. At publication time, Brent neither owns nor controls positions in GG.

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Filed under: Products and services, Wal-Mart (WMT), Marketing and advertising

Just in time for the Easter holiday, Wal-Mart Stores, Inc. (NYSE: WMT) will be rolling back thousands of prices to lure shoppers into stores for that special event shopping visit. This time, though, it’s Wal-Mart’s Canadian stores that will be rolling back the prices on hundreds of store shelves at each location.

The Easter holiday falls in March this year, as well as “Spring Break” for many kids (and many parents who scheduled vacations as well). As such, the mode to capitalize on a portion of this month certainly was not lost on the world’s largest retailer. So, Wal-Mart will be promptly lowering prices on over 3,500 products in its Canadian stores due to Easter being the third-largest holiday shopping day of the year.

With Easter falling on the earlierstdate than in almost 200 years, this seems like a unique merchandising opportunity for any retailer. A fact that Wal-Mart recognizes is that two shopping dates — Easter and Spring Break — are so close to each other that it could press the wallets and purses of financially-strapped shoppers. The “price rollback” to the rescue, though. Wal-Mart’s du-jour policy of competing mainly on price won’t be taking a break this year.

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Filed under: Major movement, Google (GOOG), Microsoft (MSFT), Apple Inc (AAPL), Wal-Mart (WMT), Target Corp. (TGT), S and P 500, DJIA, Bear Stearns Cos (BSC)

Hate to say I told you so, but when everyone was shouting “happy days are here again” after Tuesday’s huge 416-point gain, I warned readers that the market’s psychology remained fragile. Just like in a person with bipolar disorder, the market’s stratospheric highs never last and often lead to crushing lows. Today is a case in point.

First the market plunged. There are so many unfavorable bits of news contributing to the sell-off that it was hard to single one out. Financial stocks including Bear Stearns Cos. (NYSE: BSC) were under pressure following the $12.6 billion collapse of the Carlye Fund. American International Group Inc. (NYSE: AIG) fell to a 9-year low after Morgan Stanley predicted wider losses on credit default swaps, according to Bloomberg News.

A Commerce Department report showing that retail sales fell 0.6% last month sent shares of that sector including Wal-Mart Stores Inc. (NYSE: WMT), Target Corp. (NYSE: TGT) and J.C. Penney Co. (NYSE: JCP) tumbling. Even big-cap tech names such as Google Inc. (NASDAQ: GOOG), Apple Inc. (NASDAQ: AAPL) and Microsoft Corp. (NASDAQ: MSFT) were down. Safe havens were few.

Continue reading The market giveth, the market taketh away and giveth again (updated)

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Filed under: Bad news, Economic data, Housing, Recession

Home foreclosure activity dipped 4% in February 2008, as fewer default notice, auction sales notices and bank repossessions were reported than the previous month. However, overall activity remains 60% higher than a year ago, research firm RealtyTrac announced Thursday.

From February 2006 to February 2007 foreclosure activity rose 19%, RealtyTrac said.

Foreclosure filings totaled 223,651 in February 2008, a 60% increase from February 2007, with 1 in 557 U.S. households receiving a foreclosure notice during the month.

State foreclosure rates

Nevada (1 in 165 households) had the U.S.’s highest foreclosure rate, followed by California (1 in 242 households), followed by Florida (1 in 254 households). Vermont (1 in 76,836 households), West Virginia (1 in 22,364), and North Dakota (1 in 13,839) had the nation’s lowest foreclosure rates.

Continue reading Foreclosures up 60% in February — not the peak yet

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Filed under: Politics, Presidential elections

Talking about raising taxes is a tough way to attract votes, no matter what party you’re in. But given our federal budget nightmare, conservative Republican Ben Stein is saying that taxes do need to be raised. And remember, this is a guy who wrote speeches for Richard Nixon.

In a column in the Sunday New York Times, Stein delivers a pointed rebuttal to the Laffer-curve inspired voodoo economics that have controlled the Republican Party for decades: the notion that cutting taxes increases economic productivity to the point where tax cuts pay for themselves. If you don’t believe me that this hasn’t worked, check out the national debt clock.

In a column directed at Republican Presidential candidate John McCain, Stein writes that “The first step toward putting our house in order, once we are past the seemingly looming recession, is much higher taxes on the truly rich and serious enforcement to prevent offshore tax evasion.”

Ben Stein is right — as he usually is. The notion that we should continue sending more than $1 billion a day to pay interest on the federal debt to avoid raising Warren Buffett’s tax rate by a few points is nuts.

But here’s the political problem: people are optimistic and a lot of people think that they will one day be in that upper tax bracket — kind of like how 90% of people think they’re above average drivers and take risks accordingly. We may be mortgaging our future out of concern that we’ll have to pay slightly higher taxes when we are rich.

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Filed under: International markets, Forecasts, Federal Reserve

Margin call. Forced sale (liquidation). Stock / asset price decline. Cascading sales. Margin call. Forced sale (liquidation). Stock / asset price decline. Cascading sales. Margin call.

Concerned that current financial market and economic conditions might produce the above - - the dreaded financial vicious cycle? (It’s also known as the financial decelerator.)

So is the International Monetary Fund, which is why the organization took the highly unusual step of recommending that governments should be prepared to use public funds to support struggling global credit and financial markets.

Continue reading IMF: Nations should use public funds to strengthen global financial system

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Filed under: Analyst reports, Ciena Corp (CIEN), Analyst initiations

MOST NOTEWORTHY: New York Community Bancorp, Gushan Environmental and Central European Distribution were today’s noteworthy initiations:

• Citigroup believes New York Community Bancorp (NYSE: NYB) is uniquely-positioned to benefit from the current operating environment and expects loan growth, NIM expansion, and good credit to boost EPS growth over the next year. The firm initiated shares with a Buy rating and $19 target.
• Oppenheimer said Gushan Environmental (NYSE: GU) benefits from the Chinese government’s policies encouraging growth of renewable fuels; shares were initiated with an Outperform rating and $14 target.
• Jefferies initiated Central European Distribution (NASDAQ: CEDC) with a Buy rating and $66 target and views the company as a pure play on rising disposable incomes, particularly in Poland where it is headquartered.

OTHER INITIATIONS:

• Lehman assumed Ciena (NASDAQ: CIEN) with an Overweight rating and $35 target.
• BMO Capital started Millenium Pharma (NASDAQ: MLNM) with an Outperform rating and $18 target.
• Keefe Bruyette started Meridian Interstate Bancorp (NASDAQ: EBSB) with an Outperform rating and $11.50 target.

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Filed under: International markets, Newsletters, Commodities, Oil, Stocks to Buy, Israel

“T. Rowe Price Africa & Middle East Fund (TRAMX), is an interesting and intriguing addition to our “Master Aggressive Portfolio buy list,” says Mark Salzinger.

Here, the long-standing mutual fund expert and editor of No-Load Fund Investor reviews this fund, which focuses on markets in which it is often difficult for investors to research and buy individual stocks.

“Stocks in Egypt and the Oil-producing Gulf Cooperation Council Countries including the United Arab Emirates, Qatar, Oman, and Bahrain currently account for the vast majroity of the assets in this fund. Sub-Saharan Africa accounts for much less, though South African stocks currently account for about 7% of the fund.

“Launched last September, Price Africa & Middle East is attractive for several reasons. First, it is one of the very few avenues for investors by U.S. investors into some of the richest oil-producing countries of the Middle East, a region that provides considerable opportunities for substantial stock price appreciation.

Continue reading Price is right? T. Rowe targets Africa & Middle East

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Filed under: Analyst reports, Analyst upgrades and downgrades, Amer Intl Group (AIG)

MOST NOTEWORTHY: Glu Mobile, American International and Federated Investors were today’s noteworthy downgrades:

• Deutsche Bank downgraded Glu Mobile (NASDAQ: GLUU) shares to Sell from Hold after channel checks indicated that licensing costs are rising sharply for the mobile rights to popular content.
• Morgan Stanley cut American International (NYSE: AIG) to Equal Weight from Overweight citing expectations for larger than expected CDS losses vs. management’s forecast.
• UBS downgraded Federated Investors (NYSE: FII) to Neutral from Buy citing reduced attractiveness for money markets given yield.

OTHER DOWNGRADES:

• Virgin Mobile (NYSE: VM) was downgraded to Market Weight from Overweight at Thomas Weisel and to Sell from Neutral at Merrill.
• Oppenheimer cut ORBComm (NASDAQ: ORBC) to Perform from Outperform.
• PNC Financial (NYSE: PNC) was downgraded to Market Perform from Outperform at Keefe Bruyette.

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Filed under: Products and services, Consumer experience, Best Buy (BBY)

In Idaho Falls, Idaho, consumer electronics retailer Best Buy, Inc. (NYSE: BBY) is doing something quite neat. The largest electronics retailer in the U.S. is providing free technology classes to customers in order to demystify all the high-tech gadgets like digital cameras, HDTVs and even the digital television converters that will allow recent, non-digital televisions to receive digital over-the-air TV broadcasts. Seeing as though the 60+ year old analog television signals will be gone as of next February, this is quite an important deal to millions of American consumers.

Just picking up a newer digital camera can leave many customers feeling like a rocket scientist. The amount of features crammed into these tiny devices can overwhelm the average customer — and reading the owner’s manuals that seemingly were created by engineers for engineers can leave some feeling lost and alone with that new piece of equipment. So, like home improvement chain The Home Depot, Inc. (NYSE: HD), Best Buy in Idaho Falls will offer free seminars on how to use all this new techie stuff. Think of it as the “owner’s manual” for the average customer.

This is a great idea — and Best Buy should roll out this “free tech classes” idea to every store it operates in the U.S. if is hasn’t already. This is a very unique way to build customer loyalty above and beyond the service levels Best Buy already has. Best Buy employee Stina Hardin from the Idaho Falls location says “They want to take advantage of the full features of everything they buy of this new technology. We want to let them be empowered to know that this is a little new but you can handle it you can do it.” That says it all — and it’s part of the reason Best Buy’s progressive thinking has made it the first stop in consumer electronics for millions of customers.

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