beat the summer slump with these 3 hot sectors from schaeffer's investment research
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Senior Trading Analyst Bryan Sapp reveals the 3 hottest sectors to beat the summer slump.TRANSCRIPT
Beat the Summer Slump with These 3 Hot Sectors
Bryan SappSenior Trading AnalystSchaeffer’s Investment Research, Inc.
Tuesday, June 19, 2012
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http://www.SchaeffersResearch.com
SENTIMENTMagazine
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Quote by T. Boone Pickens
“My Dad said a fool with a plan can beat a genius with
no plan.”
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ExpectationalAnalysis®
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Fundamental• Earnings growth
• Dividends
• Earnings revisions
• New products/new management
• Supply/demand
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Technical
• Past price action to determine future price movement– Moving averages
– Gaps– Volume– Relative strength
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Sentiment
• Put/call ratios
• Short interest
• Analyst ratings
• Anecdotal sentiment (magazine covers, media, etc.)
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Think Like a Sentimentician
• “Cheap” can always become cheaper• Look for stocks or ETFs that have low
expectations, therefore avoiding the crowd• Low expectations translate into potential
buying power• Success comes from buying low expectations, not low prices
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Life Cycle of the Stock Market
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“The crowd is most enthusiastic and optimistic when it should be cautious
and prudent; and is most fearful when it should be bold.”
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Humphrey B. Neill Quote
Same Day as the Market Bottom in ‘09
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Probably the Most Famous Contrarian
Magazine Cover
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Quote by Hank Paulson, US Treasury SecretaryAugust 2007
“I don’t see subprime mortgage market troubles imposing a serious problem. I think it’s going to be
largely contained and the global economy is as strong as it has been in decades.”
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1950 Monaco Grand PrixJuan Manuel Fangio
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Recent Magazine Covers
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No One Wants To Own Stocks
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Improving Jobs Market Could Lead to Higher Equity Prices
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Improving Jobs Market Could Lead to Higher Equity Prices
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Which Sectors to Play in the Second Half of 2012?
• Bullish Housing• Bullish Restaurants• Bearish Large-Cap Banks
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Bullish Sector –Housing
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Improving Data
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XHB Very Strong Late Last Year
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Bullish Sector - Housing• Toll Brothers (TOL)
– 9 “Buys,” 6 “Holds,” 1 “Strong Sell”– 11% float sold short (and on the rise)– Recent surge in put buying
• D.R. Horton (DHI)– 14% float sold short– 6 “Buys,” 7 “Holds,” 1 “Strong Sell”– Recent surge in put buying
• SPDR S&P Homebuilders (XHB)
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Housing Looks Good
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Housing Looks Good
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Bullish Sector - Restaurants• Chipotle Mexican Grill (CMG)
– 8 “Buys,” 10 “Holds,” 2 “Sells”– 7% float sold short– Recent surge in put buying– Very strong price action
• Buffalo Wild Wings(BWLD)– 14% float sold short– 7 “Buys,” 7 “Holds,” 2 “Strong Sells”– Recent surge in put buying– Very strong price action
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Restaurants Look Good
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Restaurants Look Good
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Bearish Sector – Large-Cap Banks• JPMorgan Chase (JPM)
– 7 “Buys,” 3 “Holds,” 0 “Sells”– <1% float sold short– Recent surge in call buying– Weak price action
• Citigroup (C)– 14 “Buys,” 4 “Holds,” 3 “Sells”– ~1% of float sold short– Recent surge in call buying– Weak price action
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Bearish Sector –Large-Cap Banks
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Daily Chart of Financial Select SPDR (XLF)
Bearish Sector –Large-Cap Banks
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Bearish Sector –Large-Cap Banks
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Net Interest Margin (Profitability) for Banks
More Reasons to be Optimistic –What a Difference 23 Years Makes
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The Big Short and Margin Call were Huge Hits
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Be Sure to Follow Us on Twitter
• @Schaeffers
• @Brysapp
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