Barchart.com's Chart of the Day - Power Solutions International (PSIX) for Nov 12, 20

[Thierry Martin]

Manhattan is the most exclusive real estate market in the world.

The tiny, 34-square-mile island is home to Wall Street, the global headquarters of the United Nations and some of the most powerful and influential companies in the world.

That exclusivity has driven big gains for one of Manhattan's most prized properties. Since going public in the spring of 2010, Madison Square Garden (NYSE: MSG) is up a market-crushing 198%.



But if you missed out on that impressive run, don't worry. The most exclusive real estate market in the world is setting the stage for another big winner.

[Thierry Martin]

via Mother Jones:

we mapped which industries gave the most to state-level campaign donors for the 2012 election (ballot initiatives and party PACs excluded) and limited our search to the top business in each state. We also excluded unions, law firms, and nonprofits, since political giving from these entities can be associated with a variety of industries.

[Thierry Martin]

The Chart of the Day is China Sunergy (CSUN). I found the stock by sorting the New High List for Weighted Alpha and this stock has a WA of 848.00+. Since the Trend Spotter signaled a buy on 9/3 the stock is up 321.40%!

It is a manufacturer of solar cell products in China. They manufacture solar cells from silicon wafers utilizing crystalline silicon solar cell technology to convert sunlight directly into electricity through a process known as the photovoltaic effect. China Sunergy sells solar cell products to Chinese and overseas module manufacturers and system integrators, who assemble solar cells into solar modules and solar power systems for use in various markets.

[Thierry Martin]

Random Thoughts


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The market sold off a bit but then recovered. The Quack actually made it back to the plus column, albeit slightly.

Even though the Rusty ended off a bit, internally, the market seemed okay. Most stocks ended flat at worse.

The indices have been a little sideways as of late. On a net net basis, the Ps are relatively unchanged over nearly the last 2 weeks. Ditto for the Quack. In fact, it is relatively unchanged for over 2 weeks.

Even though they haven?t made must forward progress shorter-term, both the Ps and Quack are just shy of all-time and multi-year highs respectively. As a trend guy, I?m not going to argue with a market hovering around its old highs.

Futures are strong pre-market so we could see those highs challenged, at least in early trading.

Getting back to the internals, several areas managed to bang out new highs including, but not limited to Restaurants, Retail, Shipping, and Defense.

All isn?t great in the world though. Several areas such as Biotech and Banks have lost momentum as of late.

Speaking of the world, the EFA (EFA) have lost some momentum as of late too, trading back to their recent breakout levels.

Bonds (TLT) were hit fairly hard. They remain stuck in a low level sideways range.

So what do we do? I think the plan remains mostly the same. As a trend follower, you don?t want to argue with new highs. Therefore, as long as the indices can stay at or near new highs, don?t become crazy bearish. Do continue to look for clues internally. Based on some recent internal weakness (see column archives, click on the calendar on the upper right of this page), I wouldn?t completely ignore the short side just yet. Do make sure you wait for entries. That, in and of itself, might keep you out of new trouble. In fact, as mentioned recently, use liberal entries while the market finds its way. This has helped us to avoid more setups than we?ve taken over the last few weeks. I?m still bullish on Solar and other Alternate Energies (we are long TAN) and I think selected Metals & Mining have potential (we are long SLCA).

Click here to watch today's Market in a Minute.

Best of luck with your trading today!

Dave

__________

Expert swing trader Dave Landry comments on the charts for the major markets, indexes and sectors for the upcoming trading day in his daily one-minute video.

Make sure your sound is turned up. A new browser window will open and the video will begin playing within a few seconds.

[Thierry Martin]

With a 23% spike since Labor Day, the Spanish stock market may be the hottest in the world right now.

Considering that Spain has one of the world's highest unemployment rates (exceeding 25%), and that its economy that grew a scant 0.1% this summer, the euphoria is simply unexpected. But investors are often well-served by focusing on distressed assets that may have hit bottom.

In fact, three of the world's richest men (Warren Buffett, Bill Gates and Mexico's Carlos Slim) are taking the plunge. They're not buying Spanish companies because business conditions are good. They're doing it because Spanish assets are quite cheap in relation to both the money that has been invested in them already, and in comparison to other European assets.

News of an emerging Spanish revival among global investors was triggered by a $150 million purchase by Gates' investment firm of Fomento de Construcciones y Contratas (FCC), which is not traded on U.S. markets. The company has cleaned up its balance sheet and diversified its country exposure, but more than half of sales are tied to Spain, mostly in cement-making. Yet Spain, like China, has a massive glut of unsold homes that were built at the height of the bubble, and construction-related plays may not be the safest way to such a rebound.

Indeed any investments that depend on Spanish consumer confidence look risky. High levels of unemployment have been exacerbated by a sharp drop in wages. That's great news for corporate profits, but bad news for consumer spending.

Following the moves of Buffett and Slim is also challenging. They each invested in a set of assets (life insurance policies and bank branch leasebacks, respectively) that most investors simply can't do.

But that's no reason to ignore this opening. That's because in recent years, the Spanish government has enacted tough policies that led to short-term suffering but set the stage for a healthier long-term economic foundation. For example, labor laws have been loosened; provincial and municipal debt loads are starting to come down, thanks to a sharp drop in sp
ending. Other rays of hope:

Monthly retail sales turned positive in September for the first time in more than three years

? Foreign direct investment (FDI), a key measure of global interest in Spanish assets, is on track to hit 30 billion euros (about $40 billion) this year, roughly twice the levels seen in 2012

? Spanish bond yields are dropping, reflecting higher confidence that the risk of a major financial meltdown is receding.

Meanwhile, Spanish assets remain fairly inexpensive. The average Spanish stock, for example, trades for 1.38 times book value, which is near the bottom of the range of European markets (with Italy being the most inexpensive market). Spain's average dividend yield is also well above the pack.

[Thierry Martin]

Derivatives are simply investments that trade based on the price of something else. In other words, the price of a derivative is "derived" from something else.

Often that something else is an index, a stock or an exchange-traded fund (ETF). While derivatives can be customized and complex, there are also "plain vanilla" derivatives, and this variety includes ordinary call options and put options on stocks and ETFs.

An option is a derivative because the price of the option is based on the price of the underlying stock or ETF. Options give buyers the right to buy (in the case of a call option) or sell (with puts) a stock or ETF at a predetermined price (the strike price) before the option expires.

Options are typically used to leverage a move in an underlying stock or ETF, and they can potentially be used to provide portfolio insurance for individual investors.

In order to understand the costs and potential benefits of portfolio insurance, we will use an example.

Imagine an investor with an account worth $10,000 invested entirely in the stock market. If the investor believes that stocks are likely to fall 10% or more in the next year, the investor could attempt to hedge with an ETF like the ProShares UltraShort S&P 500 (NYSE: SDS). This inverse ETF is leveraged to go up twice as much as the S&P 500 Index falls on any given day.

SDS is rebalanced daily, so it will not follow the index exactly over longer periods, but it has moved in the same general direction as the underlying index.

SDS is currently trading at about $33.35. Buying 100 shares of SDS would require $3,335 and would reduce the exposure to the stock market to $6,665. If the rest of the account rose 20% and SDS fell 40%, your total account value would be about $10,000, while an account without SDS would be worth $12,000. So, buying SDS would hurt your account in a bull market.

If stocks fell 20% and SDS rose 40%, your account balance would also be about $10,000.

Instead of buying SDS, you could buy a call option with a strike price of $30 expiring in January 2015 that is trading for about $5.90. Buying call options is generally thought of as a bullish strategy, but when you buy a call option on a leveraged inverse ETF like SDS, you are actually making a bearish bet and therefore hedging your portfolio.

[Thierry Martin]

Stuff I'm Reading this Morning...

The 2-and-20 era is over. (FocusOnFunds)

Tesla gives investors a "reality check." (ValueWalk)

More signs that the Japanese economy is ready to break out. (BusinessInsider)

The supply of Twitter shares is set to increase dramatically in the months following the company?s IPO. (Quartz)

How should we think about Twitter's economic moat? (Morningstar)

How Dennis Gartman got rich by being wrong. (CrosshairsTrader)

Who are the top candidates for the Microsoft CEO gig? (Reuters)

Greggy: "this is thetime to tell Peter Schiff to go F? himself, sell your Gold and buy Stocks." (DragonflyCapital)

The biggest little secret in money management. (CapitalSpectator)

What the domestic energy revolution could mean for your portfolio. (BlackRock)

Twitter's users are young and super into news consumption. (journalism.org)

Mercedes Benz sales explode 15% in October, nearing new record. (Reuters)

Great parallel for investors: Hollywood still believes there is a tried-and-true formula to produce winners. (SethsBlog)

Why Eminem matters right now. (TheAtlantic)

[Thierry Martin]

One hundred years from now, historians will probably date the beginning of the fall of the American Empire to 1986. That is the year President Ronald Reagan ordered Jimmy Carter?s solar panels torn down from the White House roof, and when Chinese Premier Deng Xiaoping launched his secret ?863? program to make his country a global technology leader.



Is the End Near for the US?

The big question today is who will win one of the biggest opportunities of our generation.

Some 27 years later, the evidence that China is winning this final battle is everywhere. China dominates in windmill power, controls 97% of the world?s rare earth supplies essential for modern electronics, is plunging ahead with ?clean coal?, and boasts the world?s most ambitious nuclear power program.

It is a dominant player in high-speed rail, and is making serious moves into commercial and military aviation. It is also cleaning our clock in electric cars, with more than 30 low cost, emission free models coming to the market by the end of 2013. Looking from a distance, one could conclude that China has already won the technology war.

Not if Tesla?s (TSLA) Elon Musk has anything to say about it. Our only serious entrant in this life or death competition is the Tesla Model S-1, which has been on the market now for a year. At $80,000 per vehicle for the long range version that accounts for 90% of sales, production is now ramping up to a modest 40,000 units a year.

My Model X SUV won?t be delivered until January 2015. Elon tells me that he plans to bring out a $40,000, 300-mile range ?Next Gen? vehicle by 2018, which will reach 500,000 in annual production. And they will all be 100% ?Made in the USA.?

[Thierry Martin]

Manhattan is the most exclusive real estate market in the world.

The tiny, 34-square-mile island is home to Wall Street, the global headquarters of the United Nations and some of the most powerful and influential companies in the world.

That exclusivity has driven big gains for one of Manhattan's most prized properties. Since going public in the spring of 2010, Madison Square Garden (NYSE: MSG) is up a market-crushing 198%.

[Thierry Martin]

Have you heard about the "death gene"?

Not to worry -- I'll tell you about an antidote in a moment, but first consider this...
The death gene is the genetic variant that apparently can determine -- with disconcerting accuracy -- your likely departure time from this planet.

Researchers in Boston inadvertently made the discovery in the aftermath of a study that looked at sleep patterns. The scientists found that subjects with one particular genetic arrangement died just before 11 a.m., while another group with a different makeup passed away around 6 p.m.

Dave Forest, Chief Investment Strategist for StreetAuthority's Junior Resource Advisor, recently discovered a new kind of death gene.

It may not predict the demise to the hour like the Boston findings do, but it does tell us to the year -- and even the month -- when some of the biggest companies in the market might suddenly implode, and perhaps even cease to exist.

This potential terminal switch is something investors have grown so accustomed to that few think of it as a problem. But I believe it's going to rear its ugly head soon and perhaps often -- destroying billions in shareholder value, as formerly vibrant businesses are swiftly and suddenly rendered paralytic and inoperable.

In this instance, the Grim Reaper is debt.

The thing about debt, of course, is that sooner or later it comes due. And if a company doesn't have the cash to pay back maturing obligations or the ability to otherwise extend or "roll" the debt, the maturity date "is also the time when debt can turn into a death gene, wreaking havoc on firms that may appear to be healthy," Dave writes.

Dave pays particular attention to natural resource companies, a sector in which many of the big players -- along with some of the smaller ones -- are going to be facing potentially challenging payback issues over the next few years.

That's because falling commodity prices are squeezing cash flow and impeding the ability of borrowers to service or pay off their debts, according to Dave.