Investors brace for clarity on Fed's taper

Fed Chairman Ben Bernanke first hinted in May that "in the next few meetings" the Fed may begin tapering its bond buying program. The initial comment sent stocks on a volatile ride. The market has since recovered.

NEW YORK (CNNMoney) After months of agonizing over the so-called "taper", investors will finally get some answers from the Federal Reserve this week.

At the conclusion of its two-day policymaking meeting on Wednesday, the U.S. central bank is expected to give a clear indication on when it will start to scale back on the massive economic stimulus programs that have fueled the growth and juiced financial markets since the financial crisis five years ago.

Chairman Ben Bernanke first hinted in May that the Fed may "in the next few meetings" begin tapering its policy of buying $85 billion in bonds each month. The initial comment sparked worry and confusion about the timing and the scale of the tapering, sending stocks on a volatile ride.

After some bumps, the stock rally has resumed, with the Dow and S&P 500 back up near their all-time highs. A key metric for measuring market volatility, the VIX, has dropped back to a level associated with calm markets, while CNNMoney's Fear & Greed Index sits in neutral.

Bond yields had spiked after Bernanke's comment in May and continue to hover near two-year highs, with the Treasury's 10-year note yielding just below 3%. Because this is the benchmark on which other consumer loans are set, it has led to a spike in mortgage rates lately.

Experts say that these sharp moves will likely push the Fed to move cautiously as it curtails its bond buying program to help investors digest the change and limit market volatility.

"When the Fed starts to taper, it will only be taking its foot off the accelerator; it will not be stepping on the brake," said Gary Thayer, chief macro strategist at Wells Fargo Advisors.

Investors will also be closely listening to Bernanke's post-meeting press conference for specific details on these plans, and also the Fed's outlook on the economy.

Prior to the central bank's meeting Wednesday, investors will also have a chance to react to former Treasury Secretary Larry Summers' decision on Sunday to withdraw his name from consideration to succeed Bernanke as head of the Fed.

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Investors cheered on Sunday, sending stock futures higher on Summers' move, as it will avoid a contentious Senate confirmation process. However, overall, the cheer isn't expected to last, because markets participants h! ave viewed the race as a non-event.

Bond markets could react with "downward pressure" on the 10-year Treasury note yield, according to Steven Englander, global head of foreign exchange strategy at Citi.

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In addition to the Fed, investors will have a few earnings reports to chew on, as FedEx (FDX, Fortune 500) and Oracle (ORCL, Fortune 500) open up their books. Also following Twitter's announcement last week that it is has filed for a planned IPO, investors will be on the watch for documents that reveal its financial information, even though there is the possibility the company might decide to keep that private for now too.

On the economic front, investors will have reports on regional manufacturing activity, inflation, housing starts and existing home sales to parse through.

And while Syria has been on the backburner in anticipation of a diplomatic deal for some time, investors may breathe an official sigh of relief after Russia and the United States reached a groundbreaking deal on a framework to eliminate the war-torn country's chemical weapons.

Best Canadian Companies To Watch For 2014

Canadian stocks rose, sending the benchmark index to its biggest weekly advance since July 19, after energy producers advanced amid increased turmoil in Egypt.

Bankers Petroleum Ltd. (BNK) climbed a fourth day to the highest level in a year. Endeavour Silver Corp. rose 2.1 percent as silver prices rallied for a seventh straight day, the longest streak since January. BlackBerry Ltd. (BB) fell 3.9 percent.

The Standard & Poor��/TSX Composite Index (SPTSX) rose 32.40 points, or 0.3 percent, to 12,736.92 at 4 p.m. in Toronto. The index gained 1.6 percent for the week.

��e have people who had been busy selling commodities, and we��e in the kind of market where that can turn on a dime and now they��e jumping back in,��said David Cockfield, fund manager with Northland Wealth Management in Toronto. The firm manages about C$200 million ($193 million). ��he market is very sensitive right now and everybody is watching everybody else.��

Energy stocks gained 0.7 percent as a group as six of 10 industries advanced in the S&P/TSX. Trading volume was 7.6 percent higher than the 30-day average at this time of the day.

Best Canadian Companies To Watch For 2014: PennyMac Mortgage Investment Trust(PMT)

PennyMac Mortgage Investment Trust is based in the United States.

Advisors' Opinion:

• [By Jon C. Ogg]

  Sterne Agee’s team said, “We continue to prefer credit risk oriented Mortgage REITs over their Agency-only focused counterparts. Among the larger cap names in our coverage, our top picks are MFA Financial, Inc. (NYSE: MFA) and PennyMac Mortgage Investment Trust (NYSE: PMT).”

Best Canadian Companies To Watch For 2014: KBR Inc. (KBR)

KBR, Inc. operates as an engineering, construction, and services company supporting the energy, hydrocarbon, government services, minerals, civil infrastructure, power, and industrial sectors worldwide. Its Downstream business unit provides front end engineering design; detailed engineering; engineering, procurement, and construction (EPC); EPC management; and program management services to petrochemical, refining, coal gasification, and syngas markets. The company?s Government and Infrastructure business unit provides program and project management, contingency logistics, operations and maintenance, construction management, engineering, and other services to military and civilian branches of governments and private clients. Its Services business unit delivers engineering, construction, construction management, fabrication, maintenance, and turnaround services. It also offers maintenance, construction, and drilling support services for offshore oil and gas producing facili ties using semisubmersible vessels. This segment serves oil, gas, petrochemicals, and hydrocarbon processing industries, as well as power, alternate energy, pulp and paper, industrial and manufacturing, and pharmaceutical industries. The company?s Technology business unit offers various process technologies, including value-added technologies in the coal monetization, petrochemical, refining, and syngas markets. Its Upstream business unit constructs liquefied natural gas, gas-to-liquids, onshore oil and gas production facilities, offshore oil and gas production facilities, and onshore and offshore pipelines. The company?s Ventures business unit invests in and manages projects, where the company provides engineering, construction, construction management or operations, and maintenance services. KBR, Inc. was founded in 1901 and is based in Houston, Texas.

Top Gold Stocks To Invest In 2014: Goldman Sachs Group Inc.(The)

The Goldman Sachs Group, Inc., together with its subsidiaries, provides investment banking, securities, and investment management services to corporations, financial institutions, governments, and high-net-worth individuals worldwide. Its Investment Banking segment offers financial advisory, including advisory assignments with respect to mergers and acquisitions, divestitures, corporate defense, risk management, restructurings, and spin-offs; and underwriting securities, loans and other financial instruments, and derivative transactions. The company?s Institutional Client Services segment provides client execution activities, such as fixed income, currency, and commodities client execution related to making markets in interest rate products, credit products, mortgages, currencies, and commodities; and equities related to making markets in equity products, as well as commissions and fees from executing and clearing institutional client transactions on stock, options, and fu tures exchanges. This segment also engages in the securities services business providing financing, securities lending, and other prime brokerage services to institutional clients, including hedge funds, mutual funds, pension funds, and foundations. Its Investing and Lending segment invests in debt securities, loans, public and private equity securities, real estate, consolidated investment entities, and power generation facilities. This segment also involves in the origination of loans to provide financing to clients. The company?s Investment Management segment provides investment management services and investment products to institutional and individual clients. This segment also offers wealth advisory services, including portfolio management and financial counseling, and brokerage and other transaction services to high-net-worth individuals and families. In addition, it provides global investment research services. The company was founded in 1869 and is headquartered in New York, New York.

Best Canadian Companies To Watch For 2014: Royal Bank Of Canada(RY)

Royal Bank of Canada provides personal and commercial banking, wealth management services, insurance, corporate and investment banking, and transaction processing services under the RBC name worldwide. Its Canadian Banking segment offers personal financial services, business financial services, and cards and payment solutions. The company?s Wealth Management segment provides wealth and asset management, and estate and trust services to affluent and high net worth clients through distributors, as well as directly to institutional and individual clients in Canada, the United States, Europe, Asia, and Latin America. Its Insurance segment provides various life and health insurance, including universal life, accidental death and critical illness protection, disability, long-term care insurance, and group benefits; and property and casualty insurance comprising home, auto, and travel insurance, as well as wealth accumulation solutions; and reinsurance products through retail ins urance branches, call centers, independent insurance advisors and travel agencies, financial institutions, and career sales force. The company?s International Banking segment offers various financial products and services to individuals, business clients, and public institutions in the U.S. and Caribbean. This segment also provides global custody, fund and pension administration, securities lending, shareholder services, analytics, and other related services to institutional investors. Royal Bank of Canada?s Capital Markets segment engages in the trading and distribution of fixed income, foreign exchange, equities, commodities, and derivative products for institutional, public sector, and corporate clients; and involves in investment banking, debt and equity origination, advisory services, corporate lending, private equity, and client securitization businesses. The company was founded in 1864 and is headquartered in Toronto, Canada.

Advisors' Opinion:

• [By Dividend]

  Here are the biggest dividend growth stocks:
  
  Royal Bank of Canada (RY) has a market capitalization of $100.81 billion. The company employs 75,376 people, generates revenue of $19.794 billion and has a net income of $7.205 billion. Royal Bank of Canada�� earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $12.492 billion. The EBITDA margin is 63.10 percent (the operating margin is 32.55 percent and the net profit margin 25.49 percent).

Best Canadian Companies To Watch For 2014: Enbridge Inc(ENB)

Enbridge Inc. engages in the transportation and distribution of crude oil and natural gas primarily in Canada and the United States. Its Liquids Pipelines segment operates common carrier and contract crude oil, natural gas liquids (NGLs), and refined products pipelines and terminals. The company?s Gas Distribution segment distributes natural gas to residential, commercial, and industrial customers primarily in central and eastern Ontario, northern New York State, Quebec, and New Brunswick. Enbridge?s Gas Pipelines, Processing and Energy Services segment invests in natural gas pipelines, processing and green energy projects, and commodity marketing businesses, as well as performs commodity storage, transport, and supply management services. Its Sponsored Investments segment transports crude oil and other liquid hydrocarbons through common carrier and feeder pipelines, as well as transports, gathers, processes, and markets natural gas and NGLs; operates a crude oil and liqui ds pipeline and gathering system; and owns a 50% interest in the Canadian portion of Alliance Pipeline and partial interests in various green energy investments. The company was formerly known as IPL Energy Inc. and changed its name to Enbridge Inc. in October 1998. Enbridge Inc. was founded in 1949 and is headquartered in Calgary, Canada.

Advisors' Opinion:

• [By Callum Turcan]

  Bridging the way
  Enbridge (NYSE: ENB  ) currently carries 2.2 million barrels of crude oil and liquids�each day through its vast 15,372 thousand mile pipeline system.Enbridge has recently undergone�a $6.2 billion program to grow shipping capacity in Western Canada and the Bakken by 400,000 bpd. Western Canada is home to the booming oil sands play, so Enbridge is trying to capitalize on two high-growth markets.

Explosion of ETFs muddies advisers' decisions

Advisers are finding it increasingly difficult to cut through the clutter of an ever-growing universe of ETFs. In particular, these choices are clouded by an emerging genre of non-traditional ETFs, many of which were created for the purpose of attempting to deliver “better beta” or alpha and are branded as being “fundamentally based.” With more of these non-beta ETFs expected to hit the market, advisers likely will need help identifying and differentiating the host of options.

Having so many choices is a good problem to have, but it is important to understand the differences among them to construct an investment portfolio that suits its intended purpose. It may be helpful to put all ETFs into two broad categories: beta and alpha.

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ETFs designed to seek market risk and return fall under the beta umbrella. They typically track “market” indexes in which all the stocks in a relevant market are included and they are weighted based on market capitalization. The ETF market has long served advisers looking to simply replicate the returns of the market and delivering beta was preferred. Because of the additional benefits provided by ETFs such as tax efficiency, exchange-traded liquidity and transparency, the ETF industry has evolved to include alpha-pursuing funds for investors and their advisers who are looking to achieve better investment results. These funds don't own all of the stocks in a respective market and often use alternative methods to weight them rather than market capitalization.

These two broad categories, beta and alpha, could be further grouped as traditional or non-traditional.

Beta and alpha are statistical measurements used to evaluate the risk-reward profile of an investment. The four investment strategies we listed in the table are all subject to market risk — that is the risk that the underlying securities will lose value. Each approach presents some unique risk-reward characteristics. Traditional beta strategies mitigate a degree of individual security risk through diversification but, because they are market capitalization-weighted, the largest companies in the index can represent a significant weighting and create unwanted risk. The non-traditional beta and alpha approaches attempt to limit exposure to the largest stocks and increase exposure to others in an attempt to provide better returns. There are times, however, when alternative weighting approaches and stock level factors, such as valuation, become less meaningful and their effectiveness may diminish.

The area of the ETF market where we have found causes the most confusion is between the nontraditional beta and nontraditional alpha.

Nontraditional beta generally tries to provide slightly different, but better returns than the market. In other words, an alternative passive strategy. These ETFs typically track indexes that vary slightly from cap-weighted indexes. In most cases, they own the same stocks as the index but the constituents are either equal-weighted or use alternative measures of size to weight. Many of these ETFs are marketed as tracking “fundamental” indexes because the constituents are weighted based on total book value, total sales, total dividends or other factors.

It begs the question: What are fundamentals? Do book value, total sales and total dividends really provide informational value of the future stock price of a company? Or is it just another way of measuring how big the company is? After all, the largest U.S. companies tend to have greater book value, sal! es and dividends. We don't believe these measures are “fundamental” factors.

The other subcategory of the ETF market that focuses on nontraditional alpha seems to be getting a majority of the attention among advisers looking for more than better beta. These ETFs typically track indexes designed to seek risk-adjusted excess returns. Because stock prices are subject to market factors that can make them deviate from a company's “true” value, these indexes use fundamental evaluation measures to select and weight constituents commonly used by professional money managers such as price-to-book, return on assets, price momentum, sales growth, etc.

These indexes mimic the approach and behavior of active managers in many ways by applying certain rules relating to when to buy and when to sell. Also governed by the rules are what universe of stocks to select from while attempting to limit exposure to over-priced stocks and increase exposure to those which are trading at more-attractive valuations.

Academic literature supports the possibility of generating outperformance through the use of fundamental measures. To illustrate this point, we started with a large universe of stocks and divided them into deciles based on their ranking on a single valuation factor — price to cash flow. The following chart shows the average annual performance of the stocks in each decile held for one year with the process repeated each year. Although past performance is no guarantee of future results, this example shows that stocks with a better price-to-cash-flow valuation historically outperformed those with a worse price-to-cash-flow valuation. The fact is, fundamental valuation matters.

While many single valuation factors can be useful in stock selection, we believe multifactor models are a more prudent approach and generally more consistent over time. The stability of a quantitative selection model over time is an important consideration when choosing the proper mix of valuation factors.

Cu! tting thr! ough the clutter of new ETFs and in particular, those in the better/alternative beta versus the fundamentally based alpha ETFs, may still be a challenge for many investors and advisers. But putting them into one of the four subgroups can go a long way toward finding the right ETF to help clients reach their financial goals.

Dan Waldron is senior vice president and ETF strategist at First Trust Portfolios LP. Like what you've read?

Any Investors Who Were Lost, Found Profits in Oil (USO, SU, COP, OCTX)

There has been a great deal of concern about the United States suffering from a "lost generation" as Japan has now for several. For investors in oil, this has certainly not been the case: A recent article in The Wall Street Journal noted that oil has risen 310% (Brent Crude) over the last decade. The future looks equally promising for investments in the sector such as ConocoPhillips (NYSE: COP), Suncor Energy (NYSE: SU), Americas Petrogas (BOE.V), and Octagon 88 (OTCBB: OCTX).

The exchange traded fund for oil, United States Oil (NYSE: USO), is up more than 12% for the last quarter. Part of the rise of United States Oil in recent market action has been due to the "Syria Premium." But there are many aspects to oil that has it climbing in price as other commodities fall, as noted by The Wall Street Journal piece.

That is obviously why legendary investor Warren Buffett is a major shareholder of ConocoPhillips and Suncor Energy. Both Suncor Energy and ConocoPhillips pay above-average dividends. But the share prices for ConocoPhillips and Suncor Energy have been rewarding, too. For 2013, ConocoPhillips has risen by more than 26%. Over the last quarter, Suncor Energy, a Canadian firm, has jumped by more than 20%.

There is much for investors to like about Canadian oil companies like Suncor Energy, Americas Petrogas, and Octagon 88.

Americas Petrogas just reported huge increases in net revenue and sales volume for the second quarter. Management of the Calgary-based firm have hired the investment bank of Jefferies LLC to enhance shareholder value. Based in Switzerland, Octagon 88 has extensive holdings in Canada. For those looking at Octagon 88, the recent headline of an article from this site says it all: "Octagon All Set to Enter The Billion Barrel Club."

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The art of investing is buying the future income stream of an asset.

Based on the past decade, the future should be rewarding for those investing in oil companies such as Americas Petrogas, Octagon 88, ConcoPhillips, and Suncor Energy.

Emerging Stocks Drop as Petrobras Slumps With Commodities

Emerging-market stocks retreated to a one-week low as a decline in commodities sank producers from Petroleo Brasileiro SA to OAO Mechel. Indonesia's rupiah weakened to the lowest level since November 2009.

The MSCI Emerging Markets Index fell 0.6 percent to 1,010.56, the lowest since Sept. 18. Brazil's Petrobras paced losses in energy shares, while Mechel, Russia's biggest producer of coal for steelmakers, sank 2 percent. China's stocks slid, led by the biggest drop in financial companies in two months, on concern the government may encourage more competition among banks and expand property taxes. The rupiah slipped on speculation local companies boosted dollar purchases.

Commodity companies posted the biggest declines among 10 industries in the measure for developing-nation stocks. West Texas Intermediate crude tumbled to the lowest level in eight weeks on speculation that U.S.-Iranian relations are thawing and as the threat of an American military strike on Syria recedes. Gold, copper and silver also retreated.

"It's a cliche, but it's true: the market hates uncertainty," Lawrence Creatura, a Rochester, New York-based fund manager at Federated Investors Inc., which oversees about $364 billion, said by phone. "Resolution of the Syrian uncertainty, via political discourse or military action would likely be positive for the markets."

The measure for emerging markets has risen 8.7 percent in September, set for the best month since January 2012. The gauge trades at 10.6 times projected earnings, compared with the valuation of 14 for the MSCI World Index, according to data compiled by Bloomberg.

Emerging ETF

The iShares MSCI Emerging Markets Index exchange-traded fund slipped 0.8 percent to $41.87. The Chicago Board Options Exchange Emerging Markets ETF Volatility Index, a measure of options prices on the fund and expectations of price swings, slumped 3.2 percent to 22.36.

Investors also watched U.S. economic data for clues on whether the Federal Reserve will trim its bond-buying program. Confidence among American consumers fell in September to a four-month low, while home prices in 20 U.S. cities rose in the 12 months through July by the most in more than seven years.

Brazil's Ibovespa (IBOV) fell for the third time in four days as commodity producers from Petrobras to Vale SA sank. Wireless carrier Tim Participacoes SA jumped 9.6 percent after Madrid-based Telefonica SA agreed to pay $596 million to boost its stake in the controlling group of parent Telecom Italia SpA.

Russian stocks fell for a third day as crude oil, the nation's chief export earner, retreated. Mechel fell to the lowest level since Sept. 6, while OAO Gazprom (GAZP), the natural-gas export monopoly, retreated 0.9 percent.

Turkey's Lira

The Turkish lira slumped after central bank Governor Erdem Basci said policy makers will only increase interest rates if they see two-year inflation expectations worsening.

The Shanghai Composite Index slid as Ping An Bank Co. (000001) paced losses in lenders. China Vanke Co. and Poly Real Estate Group Co. (600048) dropped at least 3 percent as the China Securities Journal reported the government may accelerate a property-tax trial.

India's S&P BSE Sensex added 0.1 percent as Larsen & Toubro Ltd. (LT) drove a measure of capital goods producers to its first advance in three days. State Bank of India sank after Moody's Investors Service cut its credit rating. The rupee fell for a third day, the longest losing streak in almost a month.

The rupiah dropped 0.4 percent to 11,488 per dollar as of 3:50 p.m. in Jakarta, after reaching 11,586 earlier, the weakest level since April 2, 2009, prices from local banks show.

The premium investors demand to own emerging-market debt over U.S. Treasuries rose six basis points, or 0.06 percentage point, to 325 basis points, according to JPMorgan Chase & Co.

4 High-Yield ETFs in a QE World

When the Federal Reserve’s policymakers surprised investors and postponed their plans to taper bond purchases, both the stock and bond markets rallied on Wednesday. But now that the dust is settling, fixed income exchange traded fund flows have gone back to what they’ve been doing since early May: trending toward opportunities in yield-producing ETFs.

In a media conference call on Friday, Michael Iachini, Schwab’s managing director of ETF research, joined John Keller, State Street Global Advisors’ (SSgA) vice president of global cash and fixed income investment management, to identify where those opportunities might lie.

The focus of their call was on how ETFs are holding up in the rising interest rate environment, and the factors that investors should consider when looking for yield in bond ETFs. To be sure, both Iachini and Keller spoke of the risks implicit in high-yield bond ETFs, but they also asserted that yield has a key role to play in a broader allocation strategy.

“Obviously, the Fed’s statement surprised most of the market,” said Keller, whose firm is a partner on Schwab’s ETF OneSource commission-free platform. He noted that he saw one report showing institutional expectations were 99% that the Fed would announce a start to tapering.

While SSgA expects the Fed to begin tapering in mid-2014, rates are still low, and if not at all-time lows, then at historically low levels, Keller added. “Investors have to think of portfolio duration,” he said. “What investors need to think about is not that the Fed surprised the market, but that they need to make sure to think about the overall composition of their portfolios.”

In light of the bond market’s current low-yield conditions, Schwab’s managing director of ETF research, Michael Iachini, has identified four income-generating strategies for investors to consider:

1) High-yield bond funds. “A lot of investors are eager to jump into ETFs that pay a lot of income,” even though the underlying bonds are issued by by less creditworthy companies, Iachini said during a media call on Friday that also featured State Street Global Advisors’ John Keller.

Investor, be warned: “Typically, if you’re receiving good income from an ETF, there’s a catch: increased risk,” Iachini said. He observed that high-yield bonds — also known as “junk” — carry a default risk, and they move in tandem with the stock market.

ETFguide Chief Market Strategist Chad Karnes seconds Iachini’s observation in a comment published Thursday: “If there is one investment category that does belong in the same discussion as ‘highly correlated’ with equities, it is junk bonds,” Karnes writes. “These types of high-risk bonds behave and act more like equities than any other bond class.” 2) Bank loan ETFs. Again, Iachini said, short-term bank loan ETFs are debt issued by companies that are less creditworthy, so these investments are subject to default risk.

Yet Morningstar found that while advisors’ interest in fixed income funds has slackened since 2012, bank loan strategies were featured on both its top mutual funds and top ETFs lists this year.

“What we’re seeing in fixed incom at State Street’s SPDR family of funds is a lot of flows into the sectors that Michael mentioned,” Keller said. “We’re seeing outflows from broader maturity ETFs and inflows to shorter duration ETFs.” 3) Mortgage REIT ETFs. These instruments have the advantage of being pegged to an index rather than mortgage bonds.

However, according to IndexUniverse’s Cinthia Murphy, since the beginning of the year, mortgage REIT ETFs have had a tough time getting off the ground, as the companies they hold face declining book value amid rising interest rates.

“The higher-rate environment — 10-year Treasury note yields have jumped nearly 100 basis points so far this year — has hurt the mortgages that are on the books of these REITs because, at least in theory, the book value of REITs is inversely correlated to interest rates,” Murphy wrote on Aug. 13. 4) Closed-end funds. CEFs can buy a variety of assets, and they are currently popular as a higher-yielding instrument, Iachini said.

Investors in June got a new ETF that seeks to provide income by investing in a basket of closed-end funds, ETFtrends reported on June 19: “Exchange Traded Concepts LLC in conjunction with YieldShares LLC earlier this year filed a registration statement, including a preliminary prospectus, for the YieldShares High Income ETF (YYY).”

The risk? CEFs use leverage to amplify income, but risk increases when the bond market falls, and they can trade “at a disconnected value to assets,” Iachini said.

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Apple Receives Extensive Analyst Coverage Following iPhone Event (AAPL)

Following Apple Inc.’s (AAPL) iPhone event on Tuesday, where the Cupertino, California-based company unveiled its iPhone 5S, iPhone 5C, and other products, a number of analyst firms weighed in with mixed commentary on Wednesday.

For the most part, it seemed as though the various analysts were underwhelmed with Apple’s new products, especially the pricing on the supposedly cheap iPhone 5C. As such, Apple shares are sliding in pre-market trading. Here is some of the commentary from analysts on Wednesday:

Negative Commentary

Susquehanna
Chris Caso, an analyst at Susquehanna, reiterated his “Neutral” rating on AAPL, as he believes that this year’s iPhone product cycle won’t be a significant positive catalyst for the stock. Caso sees shares of AAPL reaching $440, which suggests an 11% downside to the stock’s Tuesday closing price.

“As usual, there were few surprises from AAPL’s well-previewed iPhone launch yesterday,” Caso commented. “We think the biggest surprise from an investment perspective is that the new iPhone 5C will be positioned as a midrange phone, and won't provide much near-term help in addressing lower price points in emerging markets, as some had speculated. We do expect the addition of DoCoMo and China Mobile to represent TAM expansion, but not to represent the significant volume boost that would come from a lower-priced emerging market phone. We therefore maintain our view that this year's iPhone product cycle isn’t a significant catalyst. We do, however, see a more significant catalyst next year, given our expectations for a larger-screen iPhone and as a new product cycle allows the iPhone 5C to be priced more aggressively at China Mobile.”

Credit Suisse
Analysts at Credit Suisse downgraded AAPL from “Outperform” to “Neutral” and see shares reaching $525. This price target suggests a 6% upside to the stock’s Tuesday closing price.

These analysts noted that Apple’s new iPhones lack innovation and that the iPhone 5S and iPhone 5C are both premium devices, despite the 5C being billed as a cheaper alternative. Because the iPhone 5C is not as cheap as the analysts would like, they believe it will limit Apple’s potential to see growth in emerging markets. Furthermore, the phones are “not quite on par” with other high-end smartphones.

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Bank of America Merrill Lynch
The analysts at Bank of America Merrill Lynch downgraded AAPL to “Neutral” from “Buy.”

UBS
The analysts at UBS downgraded AAPL from “Buy” to “Neutral.”

Lukewarm Commentary

Nomura Securities
Though the analysts at Nomura Securities maintained a “Neutral” rating on AAPL, the analysts boosted its price target from $420 to $480. This new price target still suggests a 3% downside to the stock’s Tuesday closing price, however.

“Apple retained its pricing structure with its new iPhone portfolio,” Nomura analyst Stuart Jeffrey noted. “In not chasing a new lower price point and through taking out some key component costs with the 5c, we believe that Apple has likely ensured stable gross margins in the next couple of quarters. The lowest iPhone price point remains at $450, meaning that Apple has not expanded its addressable market by targeting more price sensitive market segments. A deal with Docomo was confirmed and an announcement regarding China Mobile seems imminent, boosting near-term estimates.”

Jeffery added, “2014 could yet turn out to be a great year for Apple, but there was nothing concrete to point to emerging from yesterday’s presentation. Until innovative new products are launched in 2014, we see limited upside in the share price. FY13E EPS from $38.73 to $38.9; FY14E EPS from $39.18 to $41.76.”

Jefferies
Jefferies analyst Peter Misek reiterated his “Hold” rating on AAPL and noted that he sees shares reaching $450. This price target suggests a 9% downside to the stock’s Tuesday closing price.

“The iPhone 5C’s $99 on-contract price is higher than expected and still leaves Apple with a product gap in the low-end,” Misek commented. “While the iPhone 5S fingerprint scanner provides some differentiation, we think its low yields could be a headwind to margins and initial unit volumes. We expect choppy trading for AAPL after the launch date.”

Positive Commentary

Cantor Fitzgerald
Cantor Fitzgerald analyst Brian White reiterated his “Buy” rating and $777 price target on AAPL, as he called the iPhone event “historic.” This price target suggests a 57% upside to the stock’s Tuesday closing price.

“In our view, this was a historic event for Apple as the company began segmenting the iPhone portfolio for the first time ever with a lower priced iPhone, the iPhone 5C. We believe yesterday's gathering is but one in a string of events over the next year that will provide fuel for the stock in FY:14, as we enter what we believe will prove to be a year of innovation,” White noted.

FBR Capital
FBR Capital analysts reiterated their “Outperform” rati

Top Gold Stocks To Buy For 2014

India (NRIs included) goes crazy about gold jewellery. With the World Gold Council (WGC) aggressively marketing social and religious functions as gold buying events, the demand has shot up in the recent years to record levels. Research shows that over 16,000 tons of gold is there in Indian households predominantly in the form of jewellery. The value of this as per market price is a whooping Rs.27.2 lakh crores (US$591 billion). That is close to twice the foreign exchange reserves held by the RBI. Let's consider the factors one needs to be aware of and the know how of investing in gold.

Forms of Buying Gold

Any investor has to be aware of the different forms of buying gold. Jewellery, the most traditional and the dominant form of buying gold in India is in fact not an investment idea. The reason is that there are heavy losses in the form of wastage and making charges. This can vary from a minimum of 10% to as high as 35% for special and complex designs.

Top Gold Stocks To Buy For 2014: Australian Dollar(AU)

AngloGold Ashanti Limited primarily engages in the exploration and production of gold. It also produces silver, uranium oxide, and sulfuric acid. The company conducts gold-mining operations in South Africa; continental Africa, including Ghana, Guinea, Mali, Namibia, and Tanzania; Australia; and the Americas, which include Argentina, Brazil, and the United States. It also has mining or exploration operations in the Democratic Republic of the Congo, Guinea, and Colombia. As of December 31, 2010, the company had proved and probable gold reserves of 71.2 million ounces. The company has a strategic alliance with Thani Dubai Mining Limited to explore, develop, and operate mines across the Middle East and parts of North Africa. AngloGold Ashanti Limited, formerly known as Vaal Reefs Exploration and Mining Company Limited, was founded in 1944 and is headquartered in Johannesburg, South Africa.

Advisors' Opinion:

• [By Profit Confidential]

  Graham Ehm, Executive Vice President of South African-based AngloGold Ashanti Limited (NYSE: AU), one of the biggest gold producers in the global economy, stated the company is looking to save $500 million over the next 18 months, as capital expenditures will only be going towards their highest-quality assets. (Source: Mining Weekly, August 5, 2013.)

Top Gold Stocks To Buy For 2014: Northgate Minerals Corporation(NXG)

Northgate Minerals Corporation, together with its subsidiaries, engages in exploring, developing, processing, and mining gold and copper deposits in Canada and Australia. Its principal producing assets include 100% interests in the Fosterville and Stawell Gold mines in Victoria, Australia; and the Kemess South mine located in north-central British Columbia, Canada. The company was formerly known as Northgate Exploration Limited and changed its name to Northgate Minerals Corporation in May 2004. Northgate Minerals Corporation was founded in 1919 and is headquartered in Toronto, Canada.

Advisors' Opinion:

• [By Christopher Barker]

  I've been reminding Fools to consider positioning for Northgate Minerals' golden explosion for months, and patient gold investors continue to await the day when Northgate's powerful prospects are more fully reflected in the shares. Construction of the critical Young-Davidson mine continues right on schedule, and first production now stands about two quarters away. That means Northgate is reasonably likely to achieve its 2012 production target of 300,000 ounces, followed by 350,000 ounces in 2013. Meanwhile, Northgate recently drilled "one of the best holes ever intersected on the property" -- featuring 4.31 grams of gold per ton over a very wide 79.6-meter segment -- from a new discovery zone outside of the existing 2.8 million-ounce reserve.

  If Young-Davidson were Northgate's sole asset, these shares would still be undervalued here at about $2.60 per share. With a preliminary assessment looming for the reworked Kemess Underground project, a new drill program at the Awakening Gold project in Nevada, and two operating gold mines in Australia, Northgate figures among the clearest bargains in the gold patch.

5 Best Undervalued Stocks To Own For 2014: First Majestic Silver Corp.(AG)

First Majestic Silver Corp. engages in the production, development, exploration, and acquisition of mineral properties with a focus on silver in Mexico. The company owns interests in La Encantada Silver Mine comprising 4,076 hectares of mining rights and 1,343 hectares of surface land located in Coahuila; La Parrilla Silver Mine consisting of mining concessions covering an area of 69,867 hectares; and San Martin Silver Mine comprising approximately 7,841 hectares of mineral rights and approximately 1,300 hectares of surface land rights located in Jalisco. It also holds interests in Del Toro Silver Mine consisting of 393 contiguous hectares of mining claims and an additional 129 hectares of surface rights located in Zacatecas; Real de Catorce Silver Project comprising 22 mining concessions covering 6,327 hectares located in San Luis Potosi state; and Jalisco Group of Properties consisting of mining claims totalling 5,240 hectares located in Jalisco. The company was founded in 1979 and is headquartered in Vancouver, Canada.

Advisors' Opinion:

• [By Goodwin]

  The shares closed at $88.19, down $1.1, or 1.23%, on the day. Its market capitalization is $77.08 billion. About the company: Siemens AG manufactures a wide range of industrial and consumer products. The Company builds locomotives, traffic control systems, automotive electronics, and engineers electrical power plants. Siemens also provides public and private communications networks, computers, building control systems, medical equipment, and electrical components. The Company operates worldwide.

Top Gold Stocks To Buy For 2014: Goldman Sachs Group Inc.(The)

The Goldman Sachs Group, Inc., together with its subsidiaries, provides investment banking, securities, and investment management services to corporations, financial institutions, governments, and high-net-worth individuals worldwide. Its Investment Banking segment offers financial advisory, including advisory assignments with respect to mergers and acquisitions, divestitures, corporate defense, risk management, restructurings, and spin-offs; and underwriting securities, loans and other financial instruments, and derivative transactions. The company?s Institutional Client Services segment provides client execution activities, such as fixed income, currency, and commodities client execution related to making markets in interest rate products, credit products, mortgages, currencies, and commodities; and equities related to making markets in equity products, as well as commissions and fees from executing and clearing institutional client transactions on stock, options, and fu tures exchanges. This segment also engages in the securities services business providing financing, securities lending, and other prime brokerage services to institutional clients, including hedge funds, mutual funds, pension funds, and foundations. Its Investing and Lending segment invests in debt securities, loans, public and private equity securities, real estate, consolidated investment entities, and power generation facilities. This segment also involves in the origination of loans to provide financing to clients. The company?s Investment Management segment provides investment management services and investment products to institutional and individual clients. This segment also offers wealth advisory services, including portfolio management and financial counseling, and brokerage and other transaction services to high-net-worth individuals and families. In addition, it provides global investment research services. The company was founded in 1869 and is headquartered in New York, New York.

Top Gold Stocks To Buy For 2014: Claude Resources Inc.(CGR)

Claude Resources Inc. engages in the acquisition, exploration, and development of precious metal properties, as well as production and marketing of minerals in Canada. It primarily explores for gold in northern Saskatchewan and northwestern Ontario. The company holds interests in the Seabee gold mine located at Laonil Lake, northern Saskatchewan; and the Madsen property that consists of 6 contiguous claim blocks totaling approximately 10,000 acres, located in the Red Lake Mining District of northwestern Ontario. It also holds interest in the Amisk Gold project, which covers an area of 13,800 hectares in the province of Saskatchewan. The company was founded in 1980 and is based in Saskatoon, Canada.

Advisors' Opinion:

• [By Christopher Barker]

  Hardly a johnny-come-lately, Claude Resources initiated small-scale gold production from its flagship Seabee mine in Saskatchewan in 1991. Just last year, Claude added the Santoy 8 mine to that operation to offer a touch of timely growth. Meanwhile, the operation hosts a number of compelling exploration targets like the recently discovered Neptune zone. After 10 of 15 recent drill holes from Neptune featured visible gold, including a nice high-grade intercept of 84.66 g/t over 3.2 meters, prospects are building for Claude to add some additional years to this time-tested operation.

  While I welcome the existing cash flow from Seabee, my investment thesis for Claude Resources centers around a pair of exciting exploration properties: the Amisk joint venture project southeast of Seabee and the Madsen property at Red Lake, Ontario. At Madsen, historical gold production between 1938 and 1976 yielded 2.4 million ounces at an average grade of 9 g/t. To date, Claude has identified an indicated resource of 928,000 ounces at a comparable grade. At Amisk, drill intercepts of eye-catching thickness suggest strong potential for a profitable open pit operation, including an intercept of 2.16 g/t over 241 meters! The deposit's 921,000 indicated gold-equivalent ounces represent only an early stage hint of the deposit's full potential. The stock is a top-10 holding for Sprott Asset Management, and a core holding for this Fool as well.

Krugman: Obama’s Economic Policy a ‘Horrifying Failure’

The rapidly approaching fifth anniversary of the Lehman Brothers bust is bringing with it reflections of how far we’ve come. Yet general agreement is it’s not far enough, especially in light of another disappointing jobs report for August.

Nobel laureate and political gadfly Paul Krugman wrote a particularly scathing piece in The New York Times on Thursday, calling President Barack Obama's economic policies since the 2008 collapse a “horrifying failure.” Playing off the old adage, when you’ve lost Paul Krugman, you’ve lost middle America.

“Set aside the politics for a moment, and ask what the past five years would have looked like if the U.S. government had actually been able and willing to do what textbook macroeconomics says it should have done — namely, make a big enough push for job creation to offset the effects of the financial crunch and the housing bust, postponing fiscal austerity and tax increases until the private sector was ready to take up the slack,” Krugman breathlessly began.

His back-of-the-envelope calculation of what such a program would have looked like revealed a stimulus about three times as large as the actual stimulus, “would have been much more focused on spending rather than tax cuts.”

Would such a policy have worked? All the evidence of the past five years says yes, he argued.

“The Obama stimulus, inadequate as it was, stopped the economy’s plunge in 2009. Europe’s experiment in anti-stimulus—the harsh spending cuts imposed on debtor nations—didn’t produce the promised surge in private-sector confidence. Instead, it produced severe economic contraction, just as textbook economics predicted. Government spending on job creation would, indeed, have created jobs.”

But what about debt, he asked before answering. According to his “rough calculation,” federal debt currently held by the public would have been about $1 trillion more than it actually is, and “alarmist warnings about the dangers of modestly higher debt have proved false.”

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“Meanwhile, the economy would also have been stronger, so that the ratio of debt to GDP — the usual measure of a country’s fiscal position — would have been only a few points higher. Does anyone seriously think that this difference would have provoked a fiscal crisis?”

He concluded with a pox on both their houses, and noted it was important to realize how badly the country’s policy failed and continues to fail.

“Right now, Washington seems divided between Republicans who denounce any kind of government action — who insist that all the policies and programs that mitigated the crisis actually made it worse — and Obama loyalists who insist that they did a great job because the world didn’t totally melt down. Obviously, the Obama people are less wrong than the Republicans. But, by any objective standard, U.S. economic policy since Lehman has been an astonishing, horrifying failure.”

---

Check out Marc Faber: 3 Reasons a Crash Is Coming on ThinkAdvisor.

Can United Technologies Continue This Bull Run?

With shares of United Technologies (NYSE:UTX) trading around $91, is UTX an OUTPERFORM, WAIT AND SEE or STAY AWAY? Let's analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

T = Trends for a Stock’s Movement

United Technologies provides high technology products and services to the building systems and aerospace industries worldwide. The company operates in six segments: Otis, Carrier, UTC Fire & Security, Pratt & Whitney, Hamilton Sundstrand and Sikorsky. Countries and cities in developing countries are seeing explosive growth and will continue to do so in coming years. United Technologies provides the products and services that are incorporated into these cities and countries. Also, aerospace infrastructure is seeing a constant revamp as consumers and businesses demand lower prices and better service. With these two trends in full swing, look for United Technologies to continue to see growing profits.

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T = Technicals on the Stock Chart are Strong

United Technologies stock has seen a consistent uptrend of higher highs and higher lows over the last several years. The stock is currently trading near all-time highs and shows no imminent signs of slowing. Analyzing the price trend and its strength can be done using key simple moving averages. What are the key moving averages? The 50-day (pink), 100-day (blue), and 200-day (yellow) simple moving averages. As seen in the daily price chart below, United Technologies is trading around its rising key averages which signal neutral to bullish price action in the near-term.

(Source: Thinkorswim)

Taking a look at the implied volatility (red) and implied volatility skew levels of United Technologies options may help determine if investors are bullish, neutral, or bearish.

	Implied Volatility (IV)	30-Day IV Percentile	90-Day IV Percentile
United Technologies Options	18.2%	20%	18%

What does this mean? This means that investors or traders are buying a small amount of call and put options contracts, as compared to the last 30 and 90 trading days.

	Put IV Skew	Call IV Skew
May Options	Average	Average
June Options	Average	Average

As of today, there is an average demand from call and put buyers or sellers, neutral over the next two months. To summarize, investors are buying a small amount of call and put option contracts and are leaning neutral over the next two months.

On the next page, let’s take a look at the earnings and revenue growth rates and the conclusion.

E = Earnings Are Increasing Quarter-Over-Quarter

Rising stock prices are often strongly correlated with rising earnings and revenue growth rates. Also, the last four quarterly earnings announcement reactions help gauge investor sentiment on United Technologies’s stock. What do the last four quarterly earnings and revenue growth (Y-O-Y) figures for United Technologies look like and more importantly, how did the markets like these numbers?

	2013 Q1	2012 Q4	2012 Q3	2012 Q2
Earnings Growth (Y-O-Y)	286.1%	53.44%	6.12%	1.38%
Revenue Growth (Y-O-Y)	15.90%	14.37%	5.67%	-4.58%
Earnings Reaction	-0.79%	0.68%	-0.97%	0.44%

United Technologies has seen increasing earnings and revenue figures over the last four quarters. From these figures, the markets have been pleased with United Technologies’s recent earnings announcements.

NEW! Discover a new stock idea each week for less than the cost of 1 trade. CLICK HERE for your Weekly Stock Cheat Sheets NOW!

P = Average Relative Performance Versus Peers and Sector

How has United Technologies stock done relative to its peers, Boeing (NYSE:BA), General Electric (NYSE:GE), Honeywell (NYSE:HON), and sector?

	United Technologies	Boeing	General Electric	Honeywell	Sector
Year-to-Date Return	11.72%	21.95%	6.05%	16.23%	10.02%

United Technologies has been an average performer, year-to-date.

Conclusion

United Technologies provides aerospace and building systems products and services to a multitude of businesses around the world. The stock has seen a beautiful uptrend over the last several years and is now trading in all-time high territory. Earnings and revenue figures have been in line with investor expectations. Relative to its peers and sector, United Technologies has been an average year-to-date performer. Look for United Technologies to OUTPERFORM.

5 Big Trades to Take This Week

BALTIMORE (Stockpickr) -- Sure enough, stocks are bouncing in a big way in September.

Last week, in this column, the picture looked pretty clear: the S&P 500 was setting up for a bounce off of the trend line that's acted like a floor for shares since all the way back in November. And now, we're getting pretty strong confirmation that buyers are jumping into the market again. The August correction is very broken at this point, and the S&P is just 1.3% away from the all-time highs the big index set more than a month ago.

New month, new market indeed.

As strong as the situation looks in the broad market, it's even more tradable in a handful of individual names this week. That's why today, we're taking a technical look at five of them.

If you're new to technical analysis, here's the executive summary.

Technicals are a study of the market itself. Since the market is ultimately the only mechanism that determines a stock's price, technical analysis is a valuable tool even in the roughest of trading conditions. Technical charts are used every day by proprietary trading floors, Wall Street's biggest financial firms, and individual investors to get an edge on the market. And research shows that skilled technical traders can bank gains as much as 90% of the time.

Every week, I take an in-depth look at big names that are telling important technical stories. Here's this week's look at five high-volume stocks to trade this week.

Walgreen

There's no two ways about it – 2013 been a stellar year for shares of Walgreen (WAG). The $48 billion retail pharmacy giant has rallied more than 36% since the calendar flipped to January, and now, there's reason to believe that WAG could be headed for even higher ground. Here's how to trade it...

Walgreen is currently forming an ascending triangle pattern, a bullish setup that's formed by horizontal resistance above shares at $51, and uptrending support to the downside. As WAG bounces in between those two technically important levels, it's getting squeezed closer and closer to a breakout. When the move above $51 happens, it makes sense to be a buyer.

The 50-day moving average has been acting like a pretty good proxy for support in the very short-term. If you decide to jump in after the breakout, that's a good place to keep a protective stop.

Apple

Apple (AAPL) has been the one exception to buying pressure this week. The $430 billion tech giant got shellacked after announcing its new iPhone models on Tuesday, down more than 5% in yesterday's session as sellers logjammed orders into the market. But risk takers could have a big buying opportunity on their hands this week.

In the short-term, Apple was forming a double top, a bearish pattern formed by two swing highs that stall out at approximately the same price level. The sell signal happened quickly – it triggered when AAPL gapped down below $490 yesterday morning, giving few traders a chance to act. But what's important is that Apple almost immediately found its downside price objective at $468, a level right above a key support level at $460. In other words, this giant hated stock looks likely to bounce here.

Whenever you're looking at any technical price pattern, it's critical to think in terms of buyers and sellers. Triangles, double tops, and other price pattern names are a good quick way to explain what's going on in this stock, but they're not the reason it's tradable -- instead, it all comes down to supply and demand for shares.

That support line at $460, for example, is a price where there is an excess of demand for shares; in other words, it's a place where buyers have been more eager step in and buy shares at lower levels than sellers have been sell. If AAPL holds $460, then buying the bounce becomes a much lower risk proposition. Just keep a tight stop in place.

General Electric

Things are a little more straightforward in shares of General Electric (GE). GE is another name that's bounced higher alongside the broad market for the last ten months, and you don't have to be an expert technical analyst to figure out what's going on in shares from here. This stock is in a textbook uptrending channel right now.

General Electric pinballed off of trend line support this week, gapping higher as shares caught a bid at their long-term price floor. And generally speaking, it makes sense to buy the bounce for two big 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).

Momentum adds some extra confirmation to the move; the 14-day RSI line broke its downtrend at the start of the week, a signal that's historically been followed by a three-month rally period. If you decide to pick up shares here, consider unloading before they get too close to trend line resistance.

Berkshire Hathaway

Not all the names we're looking at are bullish setups -- Berkshire Hathaway (BRK.A) is starting to look "toppy" right now. And investors who own this name should take note.

Berkshire Hathaway has stomped the broad market's impressive performance this year, climbing almost 30% year-to-date. But Berkshire broke its uptrend on this latest correction, and it's currently in the late stages of forming a head and shoulders top: a bearish reversal pattern that indicates exhaustion among buyers. The head and shoulders is formed by two swing highs that top out around the same level (the shoulders), separated by a bigger peak called the head; the sell signal comes on the breakdown below the pattern's "neckline" level, which is right at $111 at the moment. A drop below that $111 level is the major sell signal for this stock.

Lest you think that the head and shoulders is too well known to be worth trading, the research suggests otherwise: a recent academic study conducted by the Federal Reserve Board of New York found that the results of 10,000 computer-simulated head-and-shoulders trades resulted in "profits [that] would have been both statistically and economically significant."

The case in point comes from the last name we're looking at today...

China Mobile

Last up is Chinese phone carrier giant China Mobile (CHL). This phone stock had been forming an inverse head and shoulders setup, the bullish opposite of the pattern in Berkshire Hathaway. We actually looked at this name a week ago, when shares had just broken out above their own neckline to trigger a buy. If you haven't already, now's the time to sell.

CHL showed traders a textbook breakout in the last week, filling the space between the neckline at $54 and previous resistance at $57.50 -- that resistance level got set back in January, when CHL previously got swatted down by profit taking. Yesterday's big bounce off of resistance is a good indicator that sellers are still holding strong at that level, so short-term traders should take their gains here...

To see this week's trades in action, check out this week's Must-See Charts portfolio on Stockpickr.

-- Written by Jonas Elmerraji in Baltimore.

RELATED LINKS: >>5 Tech Stocks Spiking on Big Volume
>>5 Stocks Setting Up to Break Out
>>4 Red-Flag Stocks to Sell This Fall

Follow Stockpickr on Twitter and become a fan on Facebook.

At the time of publication, author was long AAPL.

 

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

 

 

Glencore Xstrata $8.47 Billion Write-Down Is No Big Surprise

Not even the size of London-listed Glencore Xstrata's $8.47 billion asset impairment came as much of a surprise to observers of the mining industry. The amount, which includes a $7.7 billion goodwill impairment charge related to the acquisition of Xstrata, was at the high end of what analysts were expecting, but apparently Glencore wanted to get the bad news out and behind it.

Big mining firms wrote down more than $50 billion in assets in 2012, led by Rio Tinto PLC (NYSE: RIO), which wrote down $14 billion and fired its CEO. Mergers and acquisitions in the mining business totaled more than $1 trillion in the past decade, and the 5% write-down is really not so bad, all things considered.

Glencore paid $44.6 billion for Xstrata in a deal that closed in May of this year, and based on the impairment charge, the company overpaid by $7.7 billion. Glencore also took a $452 million charge on an Australian nickel mine, and a $324 million charge against its stake in Russian aluminum mining giant Rusal.

The culprit, as with all the other write-downs, is primarily low commodity prices. In addition to write-downs, the miners are combating the lower prices by reducing production and killing off or delaying new projects.

Glencore did not suspend its $0.054 quarterly dividend and the company's CEO said that the company would provide a full update of its plans at its September 10 investor day presentation.

Overpaying for an asset by nearly $8 billion might put some CEOs in the unemployment line. But Glencore's chief, Ivan Glasenberg, owns a big chunk of the company's shares and he is unlikely be looking for a new job any time soon. But if the bleeding from the Xstrata acquisition cannot be stopped, even Glasenberg may be in trouble.

As Fast Food Forward Movement Spreads, Its Leader Makes Over $250,000

The Fast Food Forward movement to increase pay for people who work at fast-food companies like McDonald's Corp. (NYSE: MCD) and Yum! Brands Inc. (NYSE: YUM) seems to have a fair point. These workers cannot live much above the poverty level if they make only $7.25 an hour, or even $8 or $9. The movement continues to push for a pay level of $15 an hour. Whether or not that hourly figure would lift these workers to a level where they make enough to support them at a lower middle class level, one aspect of the movement has undercut the Fast Food Forward efforts and will continue to do so. The leader of one of the movement’s largest supporters, the Service Employees International Union (SEIU), makes well in excess of $250,000 a year. As a matter for fact, the union’s president, Mary Kay Henry, made nearly $300,000 in 2011.

Most of the Fast Food Forward sponsors and supporters are appropriate, given the movement’s goals. These include small groups of the workers themselves, though these are hardly official unions, local clergy and local community leaders. Unfortunately, for both the workers who want and say they need higher wages and most of their supporters, the size of the protests that have spread across most of America’s largest cities have been too small to make much difference. These protests get one day of press coverage and then disappear. The heads of the fast-food chains can afford to ignore “strikes” that only include a few hundred people and rarely last for more than a few hours.

Top 10 Small Cap Companies To Own For 2014

Part of the argument that fast-food workers make is that senior management of the largest companies in the industry are extremely well paid. The response of the same executives is that their companies will operate with much lower margins if wages rise sharply. This would alienate shareholders, and management is, after all, beholden to shareholders above all else. Once the issue of top executive pay is taken off the table, the reasons for the protests lose much of their power. Mary Kay Henry’s salary undercuts the argument that only huge corporations pay their top executives lavishly. Henry makes about 20 times what a person making $7.25 an hour does.

The Fast Food Forward movement already has lost much of its momentum. The protests have come and gone in most big cities. Fast Food Forward apparently does not have any other tactics, beyond moral appeal. With a highly paid union leader at its head, even that moral appeal is limited.

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.

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.

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

Dex Media

Dex Media (DXM) is a provider of marketing solutions that include Web sites, print, mobile, search engine and social media solutions for local businesses, through its Dex One and SuperMedia Marketing Consultants. This stock closed up 5.6% at $10.25 in Thursday's trading session.

Thursday's Volume: 471,000

Three-Month Average Volume: 280,277

Volume % Change: 105%

From a technical perspective, DXM spiked sharply higher here right above some near-term support at $9 with above-average volume. This stock has been downtrending badly for the last four months, with shares plunging lower from its low of $23.86 to its recent low of $8.85. During that move, shares of DXM have been consistently making lower highs and lower lows, which is bearish technical price action. That said, shares of DXM have started to see its downside volatility stop as the stock has rebound off oversold levels. This stock got so oversold that its relative strength index reading recently dipped below 20. Shares of DXM are now starting to move within range of triggering a big breakout trade. That trade will hit if DXM manages to take out its 200-day moving average at $11.61 with high volume.

Traders should now look for long-biased trades in DXM as long as it's trending above some key near-term support levels at $9 or $8.85 and then once it sustains a move or close above Thursday's high at $10.51 and its 200-day at $11.61 with volume that's near or above 280,277 shares. If that breakout hits soon, then DXM will set up to re-test or possibly take out its 50-day moving average of $13.72.

Employers Holdings

Employers Holdings (EIG) is a provider of worker's compensation insurance focused on select small businesses engaged in low to medium hazard industries. This stock closed up 2.9% at $28.48 in Thursday's trading session.

Thursday's Volume: 252,000

Three-Month Average Volume: 119,789

Volume % Change: 75%

From a technical perspective, EIG jumped notably higher here right above its 50-day moving average of $26.48 with above-average volume. This stock has been uptrending strong for the last five months, with shares soaring higher from its low of $21.03 to its recent high of $29.12. During that move, shares of EIG have been making mostly higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of EIG within range of triggering a near-term breakout trade. That trade will hit if EIG manages to take out its 52-week high at $29.18 with high volume.

Traders should now look for long-biased trades in EIG as long as it's trending above Thursday's low of $27.65 or above its 50-day at $26.48 and then once it sustains a move or close above its 52-week high at $29.18 with volume that's near or above 119,789 shares. If that breakout hits soon, then EIG will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that breakout are $33 to $35.

Belden

Belden (BDC) designs, manufactures and markets cable, connectivity and networking products in markets including industrial, enterprise, broadcast and consumer electronics. This stock closed up 1.4% at $59.39 in Thursday's trading session.

Thursday's Volume: 400,000

Three-Month Average Volume: 215,781

Volume % Change: 69%

From a technical perspective, BDC rose modestly higher here right above some near-term support at $57 with above-average volume. This stock recently formed a triple bottom chart pattern at $55.72, $55.64 and $56.07. After finding buying interest at those levels over the last month, shares of BDC have spiked higher and moved within range of triggering a major breakout trade. That trade will hit if BDC manages to take out its 52-week high at $59.95 with high volume.

Traders should now look for long-biased trades in BDC as long as it's trending above support at $57 or above its 50-day at $56.39 and then once it sustains a move or close above its 52-week high at $59.95 with volume that's near or above 215,781 shares. If that breakout hits soon, then BDC will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that breakout $63 to $65.

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.

Power Your Portfolio with the Mass Index

Developed by Donald Dorsey, the Mass Index is an indicator that identifies trend reversals, and here, MoneyShow’s Tom Aspray explains how it helps him in his analysis.

The majority of technical tools that I use in my analysis and discuss in my trading lessons are ones that I have used for decades or are strategies that have evolved over the years. I was fortunate in the early 1980s to have access to CompuTrac, which included the majority of today’s most frequently used technical indicators.

I do continue to do additional research and came across a technical tool that, I think, investors as well as traders should consider adding to their arsenal of market-timing indicators.

It is called the Mass Index, which first appeared in the June ‘92 Technical Analysis of Stocks & Commodities article “The Mass Index”, by Donald Dorsey. As he said in the article "Range oscillation, not often covered by students of technical analysis, delves into repetitive market patterns during which the daily trading range narrows and widens. Examining this pattern, Donald Dorsey explains, allows the technician to forecast market reversals that other indicators may miss.” Dorsey proposes the use of range oscillators in his Mass index.

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Essentially, it measures the narrowing and widening of the range between the high and low prices. The signals do not tell you the direction of the trend change but that is when I rely on other tools such as the NYSE Advance/Decline and the on balance volume.

To calculate the Mass Index:

Calculate a nine-day exponential moving average (EMA) of the difference between the high and low prices. Calculate a nine-day exponential moving average of the moving average calculated in Step 1. Divide the moving average calculated in Step 1 by the moving average calculated in Step 2. Total the values in Step 3 for the number of periods in the Mass Index (e.g., 25 days).

In my research I found the Mass Index to be most useful on the weekly data. On the weekly chart of the S&P 500, the Mass Index is in blue and there are two horizontal lines, one at 27 (in red) and the other at 26.5 (in green).The chart covers the period from the early part of 2006 until early in 2010.

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Mr. Dorsey looked for what he called “bulges” which was when the Mass Index moves above the 27 level. The first example occurred on August 7, 2007, (line 1), which was two weeks after the July stock market high as the first hints of the mortgage crisis resulted in a wave of selling. Two weeks later, the S&P 500 formed a panic low on August 16.

The Mass Index dropped back below the 27 level at the end of September but did not drop below the 26.50 level, which would have signaled a change in trend. A second bulge occurred the week ending November 16 (line 2) as the Mass Index stayed above 27 until the middle of December.

NEXT PAGE: Examples of the Mass Index in Action

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Explaining Amortization In The Balance Sheet

In rather significant fashion, the U.S. Bureau of Economic Analysis recently announced a change to the way it estimates gross domestic product (GDP). The change reflects the inclusion of research and development (R&D) as an investment or asset in the economy. The term amortization is an important concept to intangible assets (such as R&D or a trademark) and reflects the fact that intangible assets have value that must be monitored and adjusted for over time. Amortization helps take care of this, and we explain it in more detail below.

Amortization Defined
Amortization occurs when the value of an asset (usually an intangible asset) is reduced over a specific time period, which is usually over the asset's estimated useful life. A good way to think of this is to consider amortization to be the cost as the asset is consumed or used up while generating sales or profits for a company. Intangible assets can include a patent, trademark or trade name, or a copyright. Major inputs into the amortization process include useful life, residual value and the allocation method, the last of which can be on a straight-line basis that is mostly straightforward.

A more specialized case of the term amortization takes place when a bond that is purchased at a premium is amortized down to its par value as the bond reaches maturity. When a bond is purchased at a discount, the term is called accretion. The concept is again referring to adjusting value over time on a company's balance sheet, with the amortization amount reflected in the income statement. In this context, the asset is amortized or capitalized over time. Otherwise, an item would simply be expensed and wouldn't exist as an asset on a company's balance sheet. A rule of thumb on this is to amortize an asset over time if the benefits from it will be realized over a time period of several years (or longer). With a short expected duration (such as days or months), it is probably best and most efficient to expense the cost through the income statement. Also, amortization refers to capitalizing the value of an intangible asset over time. Depreciation is meant to refer more to capitalizing the value of a tangible asset over time; for example, a piece of equipment or office furniture that a company might purchase.

Intangible Asset Example
Other examples of intangible assets include customer lists and relationships, licensing agreements, service contracts, computer software and trade secrets (such as the recipe for Coca-Cola). Goodwill is another major intangible asset that warrants discussion as it applies to amortization. It used to be amortized over time but now must be reviewed annually for any potential adjustments. The best example of how this can impact a company's financials in a big way is the purchase of Time Warner in 2000 by America Online (AOL) during the dot-com bubble. AOL paid $162 billion for Time Warner, but AOL's value plummeted in subsequent years and required a goodwill impairment charge of between $40 billion and $60 billion (the amount was heavily debated among the company and accountants). In previous years this amount would have been amortized over time, but it must now be evaluated annually and written down if, as in the case of AOL, the value is no longer there.

GAAP versus IFRS
Firms must account for amortization as stipulated in major accounting standards. Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS) both have similar definitions on what qualifies as an intangible asset, but there are differences in how their values must be adjusted over time. For instance, development costs to create new products are expensed under GAAP (in most cases) but capitalized (amortized) under IFRS. GAAP does not also allow for revaluing the value of an intangible, but IFRS does. This means that GAAP changes in value can be accounted for through changing amortization schedules, or potentially writing down the value of an intangible, which would be considered permanent. Finally, GAAP stipulates that advertising expenditures be expenses as incurred, but IFRS does allow recognizing a prepayment of these expenses as an asset, which would be capitalized or amortized as they are used at a later date.

Financial Statement Examples
In its August 2013 10-K filing with the SEC, technology giant Intel (Nasdaq:INTC) provided the following exhibit related to operating expenses:

Dollars (In Millions)	2012	2011	2010
Research and development	$10,148	$8,350	$6,576
Marketing, general and administrative	$8,057	$7,670	$6,309
R&D and MG&A as percentage of net revenue	34%	30%	30%
Amortization of acquisition-related intangibles	$308	$260	$18

It detailed that the amortization of intangibles was due in good part to its purchase of software security firm McAfee. You can also see that R&D is expensed annually, even though it results in value in terms of Intel's new product sales and future profits. Intel provided the following discussion on how it accounts for its identified intangible assets:

"Licensed technology and patents are generally amortized on a straight-line basis over the periods of benefit. We amortize all acquisition-related intangible assets that are subject to amortization over their estimated useful life based on economic benefit. Acquisition-related in-process research and development assets represent the fair value of incomplete research and development projects that had not reached technological feasibility as of the date of acquisition; initially, these are classified as "other intangible assets" that are not subject to amortization. Assets related to projects that have been completed are transferred from "other intangible assets" to "acquisition-related developed technology"; these are subject to amortization, while assets related to projects that have been abandoned are impaired and expensed to research and development. In the quarter following the period in which identified intangible assets become fully amortized, we remove the fully amortized balances from the gross asset and accumulated amortization amounts."

As you can see, the amortization concept is subject to classifications and estimates that need to be studied closely by a firm's accountants, and by auditors that must sign off on the financial statements.

The Bottom Line
The change to GDP mentioned above boosted economic growth several basis points over the last 50 years and made the economy nearly $560 billion larger than previously estimated. Now that it is considered a long-lived asset, accountants will have to measure whether to adjust or amortize the amount over time. The same goes for a firm's intangible assets on its balance sheet.

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Can Tesla Stock Continue to Perform?

With shares of Tesla Motors (NASDAQ:TSLA) trading around $163, is TSLA an OUTPERFORM, WAIT AND SEE, or STAY AWAY? Let's analyze the stock with the relevant sections of our CHEAT SHEET investing framework.

T = Trends for a Stock’s Movement

Tesla Motors designs, develops, manufactures, and sells electric vehicles and electric vehicle powertrain components. The company also provides services for the development of electric powertrain systems and components, and sells electric powertrain components to other automotive manufacturers. It markets and sells its vehicles through Tesla stores, as well as over the Internet. Consumers and companies are looking to save at the pump, and what better way than with electric vehicles?

Just recently, Tesla Motors posted earnings and revenue figures that beat Wall Street's expectations. The revenue beat is a positive sign to investors who seek high growth out of the company. Look for Tesla Motors to see increasing demand as consumers and companies opt for its vehicles over traditional ones.

T = Technicals on the Stock Chart Are Strong

Tesla Motors stock has been exploding higher over the past several months. The stock is now trading near all-time high prices and looks ready to continue. Analyzing the price trend and its strength can be done using key simple moving averages. What are the key moving averages? The 50-day (pink), 100-day (blue), and 200-day (yellow) simple moving averages. As seen in the daily price chart below, Tesla Motors is trading above its rising key averages, which signals neutral to bullish price action in the near term.

Source: Thinkorswim

Taking a look at the implied volatility and implied volatility skew levels of Tesla Motors options may help determine if investors are bullish, neutral, or bearish.

	Implied Volatility (IV)	30-Day IV Percentile	90-Day IV Percentile
Tesla Motors Options	66.14%	40%	39%

What does this mean? This means that investors or traders are buying a significant amount of call and put options contracts as compared to the last 30 and 90 trading days.

	Put IV Skew	Call IV Skew
September Options	Flat	Average
October Options	Flat	Average

As of Monday, there is average demand from call buyers or sellers and low demand by put buyers or high demand by put sellers, all neutral to bullish over the next two months. To summarize, investors are buying a  significant amount of call and put option contracts and are leaning neutral to bullish over the next two months.

E = Earnings Are Increasing Quarter Over Quarter

Rising stock prices are often strongly correlated with rising earnings and revenue growth rates. Also, the last four quarterly earnings announcement reactions help gauge investor sentiment on Tesla Motors’s stock. What do the last four quarterly earnings and revenue growth (Y-O-Y) figures for Tesla Motors look like and more importantly, how did the markets like these numbers?

	2013 Q2	2013 Q1	2012 Q4	2012 Q3
Earnings Growth (Y-O-Y)	105.62%	113.95%	-1.27%	Top Small Cap Stocks To Invest In 2014 -66.67%
Revenue Growth (Y-O-Y)	1420.08%	1762.78%	677.88%	-13.13%
Earnings Reaction	14.34%	24.39%	-8.77%	8.92%

Tesla Motors has seen improving earnings and rising revenue figures over the last four quarters. From these numbers, the markets have been excited about Tesla Motors’s recent earnings announcements.

P = Excellent Relative Performance Versus Peers and Sector

How has Tesla Motors stock done relative to its peers – General Motors (NYSE:GM), Toyota (NYSE:TM), and Ford (NYSE:F) — and sector?

	Tesla Motors	General Motors	Toyota	Ford	Sector
Year-to-Date Return	394.70%	22.13%	34.72%	27.80%	29.11%

Tesla Motors has been a relative performance leader, year to date.

Conclusion

Tesla Motors offers electric vehicles that consumers and companies are opting for over other luxury vehicles. Investors continue to flock to the stock, as a recent earnings announcement seems to be the current catalyst. The stock has been exploding higher and is now trading near all-time high prices. Over the last four quarters, investors in the company have been excited, as earnings have been improving while revenues have been rising. Relative to its peers and sector, Tesla Motors has been a year-to-date performance leader. Look for Tesla Motors to continue to OUTPERFORM.