S&P Downgrades US Debt

Late Friday, S&P, one of the three major credit rating agencies, downgraded the US debt rating. The other two agencies have continued to assign the highest rating to US debt. S&P cited the deficit reduction in the debt ceiling agreement as too little. Since this is uncharted territory, it’s not clear what will happen when markets open on Monday. Interest rates may rise, but most analysts expect the impact to be small. A volatile session will be likely.

US stocks closed up

U.S. stocks closed up Friday as favorable economic reports balanced out disappointing earnings results, but it wasn’t enough give the Dow industrials its fourth consecutive weekly gain.

The Dow Jones Industrial Average rose 57 points, or 0.5%, to close at 12,342, with 20 of its 30 components rising. For the week, however, the Dow is off 0.3% to snap a three-week run of weekly gains.

Leading the Dow was Merck & Co., with shares up 1.9%, after the drug maker settled with Johnson & Johnson Inc. JNJ +0.90%  over a disputed arthritis medication. More on Merck.

The gains in stocks on Friday came as a measure of consumer sentiment rose in April, beating forecasts. Read more on consumer sentiment.

Core consumer prices climbing a modest 0.1% in March, according to the Labor Department, which provide the Federal Reserve with breathing space to continue its $600 billion bond buying program. Read more on the CPI.

Also released Friday was data showing that manufacturing in the New York region climbed to a one-year high in April on a surge of new orders. Read more on the manufacturing index.

Earlier, Chicago Federal Reserve President Charles Evans said as long as core inflation remained at 1.5% or lower he was “extremely doubtful” the Fed would adjust its monetary policy.

“The bottom line is that the good economy and cheap money will continue to bolster the stock market,” Cardillo said.

The biggest drag on the blue chips, Bank of America BAC -2.36% , saw its shares fall 2.4% after its first-quarter profit missed expectations and the bank said its chief risk officer would move up to become its chief financial officer. Read more on Bank of America.

The Standard & Poor’s 500 Index rose 5.2 points, or 0.4%, to close at 1,319.68, with technology the hardest hit and utilities the best performing among its 10 industry sectors. For the week, the index fell 0.6% for its second weekly loss in a row.

Both oil and gold settled higher on the day. Crude oil for May delivery CLK11 +1.44%  settled up $1.55, or 1.4%, at $109.66 a barrel, and gold for June delivery GCM11 +0.92%  rose $13.60, or 0.9%, to settle at $1,486.00 an ounce on the New York Mercantile Exchange.

US Stocks Tread Water

U.S. stock indexes have largely been treading water, as Wall Street preps for an onslaught of earnings that will have more than 100 S&P 500 companies reporting in the week ahead. Number wise for benchmark indexes we are right back to where we were two months ago.

The duo’s earnings and others that reported last week proved mixed, with Bank of America disappointing investors by reporting a sharper-than-anticipated drop in profit and naming a new chief financial officer.

On Friday, the major indexes tallied weekly declines, with the Dow Jones Industrial Average finishing its first down week in four.

Off 0.3% from the week-earlier close, the Dow ended at 12,341.83, up 56.68 points, or 0.5%, for the day.

The Standard & Poor’s 500 Index gained 5.16 points, or 0.4%, to finish at 1,319.68, off 0.6% for the week.

The Nasdaq Composite Index rose 4.43 points, or 0.2%, to 2,764.65, down 0.6% from the prior Friday’s close,with the technology-weighted index managing a daily rise even as internet-search giant Google Inc.  offered disappointing results.

Estimated share-weighted earnings for the S&P 500 for the first-quarter 2011 stood at $207.9 billion as of Friday, above the prior week’s $207.7 billion, according to Thomson Reuters analyst Christine Short.

The estimated revenue growth rate for the S&P 500 for the first quarter is 8%, according to Short and Freeman.

The 110 S&P 500 companies slated to release results in the coming week include the first major drug company to report first-quarter earnings, with Eli Lilly and Co. slated to release its results ahead of Monday’s open.

While earnings so far have proved a mixed bag, economic reports have largely bolstered the view of an economy picking up steam, albeit not at a rapid pace.

Investor issues, in the last week or so you’ve seen some strategists revising down GDP (gross domestic product) estimates for the year, and the IMF (International Monetary Fund) did the same thing for the entire world and the U.S., so the market is grappling with that.

And, with the Federal Reserve’s policy of quantitative easing liking coming to an end at the end of June, so long as core inflation is viewed as under control, investors are trying to gauge the impact.

“When the Fed takes a little capital away from the party, investors are wondering just how the economy is going to do on its own as some of the stimulus is taken away,” said Freeman.

Fuel costs have risen in recent weeks as violence in the Middle East and North Africa prompted worries of supply disruptions.

What to do with Gold

Gold has been in a volatile trading environment, to say the least, with prices repeatedly climbing to new heights since 2008, only to lose big chunks of those gains in a single day. Deciding what to do with gold and how to do it has been a challenge even for seasoned investors.

After all, gold investment choices come in many different forms: bars, coins, jewelry, futures and options contracts, exchange-traded funds and gold mining shares.

“The good news for gold and silver is the ‘mother’ of all bull markets has further to go,” said Peter Grandich, editor of The Grandich Letter. “The bad news is the opportunity to double or triple one’s money is behind us.

So what’s an investor to do?

For one thing, don’t rush to sell. If you’re thinking of cashing out, carefully consider your options and have a good reason before you do, say most experts.

“While gold and silver have been relatively volatile in recent weeks, they have remained solid long-term uptrends,” said Brien Lundin, editor of Gold Newsletter. “These uptrends are based on fundamental economic and monetary issues — primarily too much currency floating around the world, the continuance of accommodative monetary policies, and governmental debt concerns so large that they cannot be addressed without higher levels of inflation to eat away at their values.”

That all means the long-term picture looks bullish for both gold and silver, “although the wiggly lines that make up the bigger uptrend will provide better times to buy and sell the metals,” he said.
He wouldn’t recommend that investors sell their core holdings in the metals. He advises investors to “hold some gold and silver bullion as financial ‘insurance’ — a core holding that they shouldn’t trade.”

That seems to be great advice, given the mostly upbeat outlook for higher gold prices.

Gold has reached record levels, but it “remains a long way from its real inflation-adjusted high of $2,400 an ounce seen 31 years ago,” said Mark O’Byrne, executive director at international bullion dealer GoldCore. And “whether gold will fall or not, at some stage, is irrelevant if one is buying for portfolio diversification, safe haven and store of value reasons.”

So the best way to make the right decision to buy, sell or hold gold is to first fully understand investment goals.

Are you looking at gold as a short- or long-term investment and why?

If you aren’t sure, take some off the table,” he said. “Sometimes, it is a good idea to take your investment out (or reduce it) and ‘play’ with the house’s money,” and you can do that by selling part of your holdings outright, setting stops underneath the current market price or using options.

That gradual approach may be a good choice.

Stocks to watch: TI, Halliburton, Citi et al

Among the companies whose shares are expected to see active trade in Monday’s session are Texas Instruments Inc., Halliburton Co. and Citigroup Inc.

Texas Instruments Inc. TXN +0.81%  is expected to report first-quarter earnings of 58 cents a share, according to analysts surveyed by FactSet Research.

Halliburton Co. HAL +1.47%  is forecast to post earnings of 59 cents a share in the first quarter.

Citigroup Inc. C -0.23%  is estimated to report a profit of 9 cents a share in the first quarter.

Eli Lilly & Co. LLY +0.73%  is expected to report earnings of $1.17 a share in the first quarter.

Gannett Co. GCI +2.28%  is projected to post a first-quarter profit of 42 cents a share.

Keycorp KEY +0.80%  is estimated to report a profit of 14 cents a share in the first quarter.

TD Ameritrade Holding Corp. AMTD +2.03%  is forecast to post earnings of 28 cents a share in the fiscal second quarter.

Amylin Pharmaceuticals Inc. / AMLN +16.25%  is projected to post a first-quarter loss of 23 cents a share.

M&T Bank Corp. MTB +0.18%  is expected to report first-quarter earnings of $1.41 a share.

Which stocks should you own now?  Check out the latest Stocknod Hotsheet picks.

StockNod Stock Alert – ION

Here is an example of the StockNod Stock Alerts in action on a stock called ION Geophysical Corporation (IO).  Here is a link to the stock analysis chart for ION Geophysical

Stock Alerts

From the beginning of 2009 to present, you can see the frequency of alerts fired on IO.  The StockNod algorithm looks for ideal entry and exit points based on price and volume.  Over this time period, and investment of $10K turned into over $60K!

StockNod Alert - ION Geophysical Stock Chart

StockNod Profit Table - Ion Geophysical

Profile of IO

ION Geophysical Corporation provides geophysical technology, services, and solutions for the oil and gas industry worldwide. It operates in four segments: Land Imaging Systems, Marine Imaging Systems, Data Management Solutions, and ION Solutions. The Land Imaging Systems segment offers cable-based, cable less, and radio-controlled seismic data acquisition systems, digital and analog geophone sensors, vibrator trucks, and source controllers for detonator and vibrator energy sources. The Marine Imaging Systems segment provides towed streamer and redeployable ocean bottom cable seismic data acquisition systems and shipboard recorders, streamer positioning and control systems, and energy sources comprising air guns and air gun controllers. The Data Management Solutions segment offers software systems and services, including Orca, a software product for towed streamer navigation and integrated data management applications; SPECTRA software system for seismic survey operations; GATOR software system for ocean bottom cable and transition zone operations; consulting services for planning, designing, and supervising survey operations; and post-survey analysis tools consisting of SPRINT navigation processing and quality control software for marine geophysical surveys, and REFLEX software for navigation and seismic data analysis. The ION Solutions segment offers seismic data processing and imaging services for marine and land environments, and a seismic data library, as well as integrated seismic solution services to manage the seismic process, such as survey planning and design, project oversight of data acquisition operations, advanced signal processing, final image rendering, and geophysical and reservoir analysis. The company was formerly known as Input/Output, Inc. and changed its name to ION Geophysical Corporation in 2007. ION Geophysical Corporation was founded in 1968 and is headquartered in Houston, Texas.

Excellent low P/E value buys

Quality companies with low price-to-book value ratios (P/BV) have outperformed companies with higher valuations for the past three-, ?ve- and 10-year periods.

Our search for undervalued companies to with price to book value ratios found three stocks in tech-related sectors: Kyocera (KYO), PC Connection (PCCC), and Thermo Fisher Scienti?c (TMO).

To ?nd the best stocks with low price-to-book value ratios, we used several additional criteria to make our selections.

We narrowed our list of companies by requiring: Value Line Financial Strength ratings of A or better, dividend payments increasing over time, low P/E ratios and good earnings prospects for the next 12-month and ?ve-year periods.

The company produces a vast array of products including semiconductor and electronic
components used in cell phones, routers, cameras, printers, automotive electronics and solar power-generating systems.

Kyocera’s materials, components and ? nished products are used in virtually all ? elds of industry.

After weak sales and earnings results in 2008 and 2009, we believe EPS will soar 63% during the next 12 months. KYO shares are undervalued at 11.9 times forward 12-month EPS. KYO is low risk.

PC Connection sells personal computers and related peripherals, software and networking products directly to business, education, government and consumers located primarily in the U.S.

The company sells, services and supports 130,000 brand-name products from its headquarters in New Hampshire and distribution center in Ohio.

EPS tripled during the past three-month and 12-month periods and will likely increase another 21% during the next 12 months. Sales increased 32% during the three months ended 9/30/10, led by a 54% increase in sales to large corporate accounts.

PCCC shares are undervalued at 10.3 times forward 12-month EPS and 0.90 times book value. PCCC is medium risk.

Thermo Fisher Scienti?c was created in 2006 when Thermo Scienti? c and Fisher Scienti?c merged. The combined company is a leading provider of life science and laboratory analytical instruments, equipment, reagents and supplies.

Thermo Fisher also provides software and services for medical and scienti?c research laboratories.

Management is focusing on further expanding operations in China. Sales increased 6% and EPS rose 15% during the three months ended 9/30/10.

EPS will likely advance 10% or more during the next 12 months. At 13.6 times forward 12-month EPS, TMO shares are inexpensive. TMO is very low risk.

Stocks spike after economic reports

Stocks rose sharply Wednesday after a batch of economic reports offered some hope that the U.S. economy was improving. Investors seized on encouraging readings on the labor market and Americans’ incomes while shrugging off a steep fall in new home sales and manufacturing orders.

The rebound suggests that investors are no longer counting on a rebound in the housing market to move the economy forward.

The upturn marked an abrupt reversal from earlier this week, when an exchange of artillery fire between North and South Korea led nervous investors to sell stocks and dash into gold, Treasurys and other assets often used as hiding spots.

The Dow Jones industrial average rose 134.75, or 1.2 percent, to 11,171.12 in early afternoon trading.

The Standard & Poor’s 500 index gained 15.45, or 1.3 percent, to 1,196.18. The Nasdaq composite index rose 46.89, or 1.9 percent, to 2,541.80.

Safety assets moved lower as investors became more willing to take on risk. The dollar and gold both fell, while Treasury prices edged lower, pushing their yields higher. The yield on the 10-year note inched up to 2.85 percent from 2.77 percent Tuesday.

U.S. stock and bond markets will be closed Thursday for the Thanksgiving holiday. They will reopen for half-day sessions on Friday.

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Global anxiety has gold spiking

Gold prices continue to set records as investors look for a safe haven to ride out the storm. The price of gold keeps going up, setting records week after week. Gold rallied to record highs in Europe on Friday, with spot prices knocking on the door of $1,300 an ounce, as expectations grew that further quantitative easing could lead to volatility in the currency markets.

On Thursday it touched yet another new high, trading at $1,296.30 an ounce. Just two years ago, it was trading at about $900.

Low interest rates, a falling dollar and anxiety over holding government debt have prompted investors and central banks alike to buy the metal — something tangible instead of a promise.

To Weston, the gold rush reflects his clients’ diminishing trust in Wall Street and the federal government. Gold has fans in the tea party movement and among viewers of conservative cable-talk host Glenn Beck, who touts it on his show.

In financial circles, analysts credit the rising price of gold to an unlikely duo: investors seeking shelter and central bankers from India, Bangladesh and other developing countries. Both are wary of a falling dollar.

It starts with low interest rates. Central banks usually hold currencies from the world’s largest economies — dollars, pounds and yen — and then invest them in short-term bonds.

At the moment, interest rates in the United States and other developed countries are near record lows. Currencies tend to follow the path of interest rates, so not only do central banks get little return from buying dollars, but they face the prospect of the dollar falling even further. What’s the alternative?

To understand gold’s price surge, think of it as shifting between two roles, commodity and currency, said Barclays’ Cooper. When the majority of buyers use gold for jewelry and for filling teeth, it trades like a commodity and is relatively stable. In the 1990s, for instance, it traded between $300 and $400 an ounce. Gold is still well off its inflation-adjusted high. It hit $850 in ounce in 1980, which works out to about $2,250 in today’s dollars.

“Now you need to look at gold as wearing its currency hat,” she said. “It’s a barometer of investors’ concerns over the macroeconomic outlook.”