Wal-Mart Stores, Inc. Reports Top Sellers for Start of Black Friday (WMT)

Early this morning, Wal-Mart Stores (WMT) reported preliminary information about its Black Friday sales, which began on Thanksgiving and will continue until Sunday.

The retail giant reported that it served 10 million customers between 6:00 and 10:00 last night in its physical stores, putting it on track to beat last year’s 22 million customers. The company reported that its top sellers were “big screen televisions, the iPad mini, laptops, XBOX ONE, PS4 and Call of Duty Ghosts,” including sales online and in-store.

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Wal-Mart’s stock was 52 cents, or 0.64%, in pre-market trading. YTD, the company’s stock is up 16.88%.

Flurry of Stock, Bond Issuance Is a Danger Sign for Markets

Just as financial markets were recovering from the Washington turmoil, a new danger signal has started blinking, in the form of a flood of stock and bond issues.

Many people see no problem. They find the new-issue action exciting, as the hoopla over last week's $2.1 billion offering by Twitter Inc.(TWTR) showed. The process fuels entrepreneurship and securities issues are mother's milk for brokerage firms, generating enormous profits.

But when new issues become as massive as they are today, it can mean markets are overheating and getting ready to give back some gains. That is why some experienced investors weren't wearing party hats at the Twitter celebration.

Companies are racing to issue stock and bonds because markets are high, offering great prices for sellers, said Michael Farr, president of Farr, Miller & Washington, which oversees more than $950 million in Washington, D.C.. Issuers are grabbing current terms before markets fade. That makes experienced investors ask themselves a classic question: If the smart money is selling, should we be buying?

"I wouldn't be surprised by a market correction here. I don't think anyone would," said Mr. Farr. A correction means a drop of 5% to 15%, less severe than the 20% decline that would signal a bear market.

So far this year, U.S. companies have put out $51 billion in first-time stock issues, known as initial public offerings or IPOs, based on data from Dealogic. That is the most since $63 billion in the same period of 2000, the year bubbles in tech stocks and IPOs both popped.

Follow-on offerings by already public companies have been even larger, surpassing $155 billion this year. That is the most for the first 10-plus months of any year in Dealogic's records, which start in 1995.

It isn't just stock. U.S. corporate-bond issues have exceeded $911 billion, also the most in Dealogic's database. Developing-country corporate-bond issues have surpassed $802 billion, just shy of the $819 billion in the same period last year, the highest ever.

All of this reflects the heights of the markets in question.

The broad S&P 500 stock index is up 28% in just 52 weeks. It closed Friday at 1770.61, an eyelash short of its record, 1771.95, hit in October.

The bond situation is somewhat different. Bond issuers have been rushing to market because of fears the Federal Reserve would soon push longer-term interest rates higher. When the Fed put off any reduction in its economic and financial stimulus during the recent Washington crisis, market rates fell and bond prices surged. Companies seized the chance to issue bonds at reduced interest rates.

But on Friday, a stronger-than-expected October job-creation report rekindled expectations that the Fed will reduce stimulus before long. That pushed longer-term interest rates higher, making some conclude that exceptionally low rates and high bond prices indeed are ending.

The boom in stock and bond issues doesn't necessarily mean markets are about to crater. Investors have demonstrated in the past that they can push markets to extremes.

"Before we hit a real stock-market top we see an excess of excess. We see a real divorce between supporting fundamentals and share prices," said Mr. Farr in Washington. Things aren't that bad yet, he added.

The S&P 500, for example, is trading at about 19 times its companies' earnings for the past 12 months. That is above the historical average of 16 but still short of the 20-to-30 range hit before recent bear markets.

That doesn't reassure James Barksdale, president of Equity Investment Corp., which manages $4.1 billion in Atlanta.

"People are becoming complacent about risk," he said.

He considers the flood of IPOs and bond issues just one of the warning signs.

Among others: Small stocks with weak finances are outperforming bigger, safer stocks. And the risky payment-in-kind bond, which can pay interest in new bonds rather than money, is popular again.

Mr. Barksdale doesn't try to predict markets' direction, but he is having trouble finding cheap stocks to buy. Many of his old accounts have 11% cash, he said, and new accounts may have more than 20%, simply because he can't find cheap investments. The last time his cash was so high was 2007, the year stocks hit a top. "The rational buyer is getting squeezed out," he said.

University of Florida finance professor Jay Ritter, an IPO expert, says stock-issuance data do show markets heating up, but he isn't worried.

He calculates that 62% of IPOs this year have been for money-losing companies. That is the highest of any year since his data began in 1975, aside from 1999 and 2000, the height of the tech-stock bubble. The average for the past decade is 47%.

But the increase is all due to a surge in biotech IPOs, he said. Unlike the Internet-bubble era, he said, "We aren't seeing a lot of marginal companies going public."

Outside biotech, few companies are going public with less than $50 million in sales. The median IPO this year is for a 12-year-old company, well above the historical average of eight. Many, like Twitter, are biding their time and becoming established before issuing stock. Prof. Ritter thinks it is too soon to worry.

"In 1998 I thought equity prices were getting a little too high and I exited the equity market too early," he recalled.

Mr. Farr agrees. Like Mr. Barksdale's, his cash levels are creeping up because he can't find cheap stocks. Market gains may come harder now, he said, but he doesn't see disaster looming.

"My guess is that we have an expensive market and it is probably going to get more expensive," he said.

Is Microsoft an Attractive Investment?

With shares of Microsoft (NASDAQ:MSFT) trading around $37, is MSFT 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

Microsoft is engaged in developing, licensing, and supporting a wide range of software products and services. The company also designs and sells hardware and delivers online advertising to customers. It operates in five segments: Windows and Windows Live, Server and Tools, Online Services Division, Microsoft Business Division, and Entertainment and Devices. As a mature company, Microsoft is also offering a stable dividend, which is currently yielding around 3.32 percent annually.

Microsoft has been hitting Google (NASDAQ:GOOG) hard with its "Scroogled" efforts, a website that functions as both a Microsoft Bing shopping ad and part Google privacy invasion warning. The Scroogled website brings you all the latest news on Google's Gmail privacy concerns, the claim that Google "spams your inbox," and shows how the company only displays shopping results from paid ads. "We say that when you limit choices and rank them by payment, consumers get Scroogled. For an honest search result, try Bing," reads the website.

T = Technicals on the Stock Chart Are Strong

Microsoft stock has seen its fair share of volatility in the last couple of years. The stock is currently trading sideways and may need to spend some time here before heading higher. 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, Microsoft is trading above 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 Microsoft options may help determine if investors are bullish, neutral, or bearish.

	Implied Volatility (IV)	30-Day IV Percentile	90-Day IV Percentile
Microsoft options	24.31%	56%	54%

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
December Options	Flat	Average
January Options	Flat	Average

As of today, there is an 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.

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

E = Earnings Are Mixed 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 Microsoft’s stock. What do the last four quarterly earnings and revenue growth (Y-O-Y) figures for Microsoft look like and more importantly, how did the markets like these numbers?

	2013 Q3	2013 Q2	2013 Q1	2012 Q4
Earnings Growth (Y-O-Y)	-3.08%	11.94%	20.00%	-2.56%
Revenue Growth (Y-O-Y)	Top Stocks To Invest In 2014 7.36%	10.17%	17.71%	2.78%
Earnings Reaction	5.96%	-10.85%	3.36%	0.90%

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

P = Excellent Relative Performance Versus Peers and Sector

How has Microsoft stock done relative to its peers, Apple (NASDAQ:AAPL), Oracle (NASDAQ:ORCL), Google (NASDAQ:GOOG), and sector?

	Microsoft	Apple	Oracle	Google	Sector
Year-to-Date Return	41.09%	2.13%	5.82%	50.32%	25.84%

Microsoft has been a relative performance leader, year-to-date.

Conclusion

Microsoft is a technology company that provides valuable software products and services to consumers and companies worldwide. The company has been hitting Google hard with its "Scroogled" efforts, a website that functions as both a Microsoft Bing shopping ad and part Google privacy invasion warning. The stock has been moving higher in recent years and is now trading sideways. Over the last four quarters, earnings have been mixed while revenues have been rising which has left investors pleased about the company. Relative to its peers and sector, Microsoft has been a year-to-date performance leader. Look for Microsoft to OUTPERFORM.

Ten top tech gifts for the holidays

LOS ANGELES — You've gotten out your checkbook, or more likely, your credit card and are ready to start buying tech gifts for loved ones. We decided to offer an assist with our take on ten of the gifts people are talking about the most. First, the bad news: the top three are going to be a very tough score. The good news: the other seven should be easy to find.

The 2013 Hot List:

1. Apple's iPad Air and iPad mini with Retina. The bigger screen iPad Air — lighter, thinner and cooler than its predecessor — ships in 5-7 business days and starts at $499. This year's version of the iPad mini — now with a brighter and sharper Retina display and a heftier $399 price tag — sold out quickly when first released in November. Apple now says the Mini will be delivered within 5-10 business days when you order from the company's website.

Tip: You can order online at apple.com and pick up in an Apple retail store. On Black Friday, Apple is offering free shipping.

2. Xbox One and Sony PlayStation 4. Microsoft's and Sony's rebooting of their gaming systems-meet-entertainment center have sold out with initial sales of 1 million each, but online reports suggest some stores have units in stock.

Tip: If a video game console is on your must-have gift list, check nearby stores for details on when their next shipments arrive. That might help you snag one instead of paying higher prices on sites like eBay.

Tech gadgets make many a holiday wish list. The new Fitbit Force adds a display to the popular fitness tracker from Fitbit.  FitbitFullscreen The Xbox One on display at a Best Buy store in Evanston, Ill.  Nam Y. Huh APFullscreen The new Sony Playstation 4 on display at a BestBuy store in Chicago.  Nam Y. Huh APFullscreen Google's new Nexus 5 phone is the first device to run on the latest version of Google's Android operating system.  Uncredited APFullscreen This photo provided by Sonos shows an iPhone and Sonos Black Play 1. Sonos speakers run over Wi-Fi and need to be plugged into a power outlet. The speakers are designed to disperse sound in a wide radius and fill a room with sound.  KrugCapture APFullscreen Canon's SX280 HS is Wi-Fi enabled for easy sharing.  Jefferson Graham, USA TODAYFullscreen The Roku 3 is the latest in the popular line of media streaming devices.  RokuFullscreen This unobtrusive $35 TV dongle from Google is a simple way to stream media.  GoogleFullscreen Thinking about experimenting with automation in your home? The LED Hue light bulb by Philips lets you control your lights with your phone.  PhilipsFullscreenLike this topic? You may also like these photo galleries:ReplayAutoplayShow ThumbnailsShow CaptionsLast SlideNext Slide

3. Laptops. Ask the average student and you may get a request for a MacBook Air, which starts at $999, but if you're looking for something more affordable, many Windows 8 laptops are way more reasonably priced.

4. Chromecast. The most economical tech gift of the year? Look no further than the Google Chromecast, which beams YouTube, Netflix, HBO Goand Hulu from your smartphone or tablet to the TV. Cost: just $35.

5. Roku 3. Roku is a market leader in bringing Internet streaming to the TV. The Roku 3 box, $99, offers 750 "channels," in! cluding Ne! tflix, Hulu Plus, Amazon Prime, Vimeo and others. And it has the coolest remote we've ever seen — truly wireless, with a built-in headphone jack so you won't disturb others in the house.

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6. FitBit Force. The latest edition of the wristband monitor lets you track your steps, miles and sleep habits. It is easy to set up, and communicates via Bluetooth to your smartphone or tablet. Best of all, the battery charge lasts a week.

7. Sonos Play One. Remember when we used to string speaker wire all over the house to bring music to additional rooms? No longer, thanks to companies like Sonos, which makes portable audio systems that connect easily and wirelessly, and churn out Internet music from channels like Pandora, Spotify and your iTunes library. The new Play One is the smallest, most affordable Sonos speaker, at $199.

8. Nexus 5 phone: Here's one ofthe lowest priced, most full-featured smartphones to date. Google's Nexus 5 phone sells for just $349. With the Nexus 5, you're not locked in to a 2-year contract, as the phone isn't subsidized when you buy it from Google's online Google Play store.

9. Canon Powershot SX280: Yes folks, we still need cameras for great photos, even in the smartphone era. Pictures on the iPhone and Galaxy S4 are great, but you can't zoom in on the action, the flash is poor and there are limits for how long you can shoot a video. With the $199 SX280, you get a whopping 20X zoom, which will bring you way closer to the action, and you can put in a big fat memory card and not have to worry about running out of space. And the camera has Wi-Fi, just like a smartphone, so you can share directly from the camera to social networks and e-mail.

10. Philips Hue Connected Bulb. Want to impress your friends? Pick up the new $199 Hue system and adjust the lights in your home not with a dimmer but via a smartphone or tablet. Want to turn off the lights without r! eaching f! or the switch? The Hue can help you with that, and turn on automatically in the morning as well. Forgot to turn on the lights before you left home and want to keep snoopy burglars away? No problem — reach for the app from anywhere, and flick them on.

Readers: what's on your tech wish list? Let's chat about it on Twitter, where I'm @jeffersongraham.

September existing home sales fall 1.9%

Existing home sales slipped 1.9% in September due to higher mortgage rates and prices, the National Association of Realtors said Monday.

The association says sales of re-sold homes fell 1.9 percent last month to a seasonally adjusted annual rate of 5.29 million. That's down from a pace of 5.39 million in August, which was revised lower. The sales pace in August equaled July's pace. Both were the highest in four years and consistent with a healthy market.

The report comes amid signs of slowing in the housing recovery.

Nationwide, home values were up 1.2% in the third quarter from the second, Zillow data show. That's down from a 2.5% jump in the second quarter from the first.

Higher interest rates, fewer investor buyers and more homes for sale are all contributing to smaller price gains, economists say.

Last week, 30-year fixed rate loans averaged 4.28%, up from 3.37% a year ago, Freddie Mac said.

The government shutdown that ended last week and the related debate over raising the debt ceiling will also likely have an adverse effect on October home sales, says Leslie Appleton-Young, economist for the California Association of Realtors.

The association said last week that California home sales declined in September for the second straight month.

Contributing: The Associated Press

Tech stocks: Apple up slightly after PrimeSense…

Apple shares are up slightly in pre-market trading Monday after the company confirmed it was acquiring 3-D sensor company PrimeSense for $350 million.

PrimeSense confirmed the deal on Monday. Apple has also confirmed the acquisition, according to All Things D.

The company's technology is available in more than 24 million digital devices, most notably featured in Kinect, Microsoft's motion and voice sensor used with its Xbox video game consoles. The device lets users perform tasks with gestures or voice commands.

Meanwhile, BlackBerry shares are down more than 1% following a report that the company's chief marketing officer and COO are leaving.

According to The Globe And Mail, chief operating officer Kristian Tear and marketing chief Frank Boulben are departing, while James Yersh has been named the company's new chief financial officer.

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Earlier this month, BlackBerry announced it was taking itself off the market, receiving a $1 billion investment from Fairfax Financial Holdings, the firm once reported to have reached a deal to acquire the struggling smartphone maker.

BlackBerry also announced CEO Thorsten Heins would step down. Former Sybase CEO John Chen will take his place on an interim basis.

Follow Brett Molina on Twitter: @bam923.

Volcker Rule Now 233% Longer, 100% Less Effective

Let's talk about the so-called Volcker Rule.

When the Dodd-Frank Act was signed into law in 2010 - the bank-busting, save the system, "we'll never again have a financial meltdown that could destroy the world" legislation - it was more of an outline.

The ostensible idea, in the aftermath of the credit crisis, was to give regulators time to write sensible rules and not throw the baby out with the bathwater. Yeah right.

Of course, the real deal was about giving banks and financial services institutions time to fight every rule and regulation, from first drafts to final implementation.

Along the way, it was proposed that banks should spin off their risky businesses into separately capitalized companies, in the form of what an investment bank or a merchant bank used to be. That way they could play hard and fast. And if they failed, tough luck, you'd be on your own. Meantime, the sister bank would have Federal Deposit Insurance Corporation (FDIC) insurance to cover its depositors and make loans and do traditional bank things. Boring and stuffy bank things.

The Obama administration didn't go for that. President Obama, for all his bluster about bad banks needing a spanking, didn't go for that.

Obama advisor Paul Volcker - himself one the most revered and celebrated Federal Reserve Chairmen in the institution's 100-year history - wanted the separation of gun-slinging banks from insured depository institutions. He suggested banks stop proprietary (or "prop") trading altogether. (That's betting the house's money to make outsized gains to enrich the homeboys who are pulling leveraged levers for fun and profit.)

That suggestion became known as the Volcker Rule.

There's still no finished Volcker Rule. When I wrote about it 18 months ago, it was 300 pages long (see "Why the Volcker Rule Is a Cop-Out and a Joke"). There's now a 1,000-page draft circulating with all kinds of marks and bruises all over it. But it's not done, not nearly done. It's one rule.

Part of the problem is that banks and bank lobbyists and Congressmen in the banks' pockets are trying to stymie what they don't like, meaning the rule itself.

But the bigger problem is this: No fewer than five regulatory agencies are collaborating on the rule.

The Fed and the U.S. Securities and Exchange Commission (SEC) want to cut banks as wide a highway as they can, so banks aren't "hindered" from doing what they do that facilitates smooth-running capital markets. The U.S. Commodity Futures Trading Commission (CFTC) and the FDIC want to fill in the loopholes being written into the rule. The Office of the Comptroller of the Currency (OCC), they're clueless anyway, so they're just reading drafts over lunchtime martinis.

It all comes down to banks wanting to conduct "important functions" - such as market-making and hedging - without stupid restrictions. After all, market-making is not proprietary trading, they say, and hedging, well, that's hedging, they say.

Of course, that's all a load of BS. Here's what's really going on.

I was a market-maker (that's an official stamp) on the Floor of the Chicago Board Options Exchange. And I was the hedge trader for one of the world's biggest banks. Let me tell you what market-making is and what hedging is... really:

Market-making is when you are supposed to make a two-sided market. It's your job to simultaneously bid and offer for a stock, an option, a commodity, whatever.

I'll use stocks as an example. If you (supposing you're a broker or dealer or floor trader) ask me for a "quote," I have to give you a price I would buy the stock at and a price I would sell you the stock at and how much stock I am willing to buy or sell.

You might want to ask a bunch of market-makers what their quotes are (or these days you see what their quotes are on your computer screen), and you try to buy at the lowest price being offered by some market-maker or sell at the highest price some other market-maker is quoting.

Market-making is all about taking risks. Market-making is itself proprietary trading. You want to buy stock, and I sell you stock. I did that to facilitate you. But in doing so, I took a position, I sold you stock, maybe I sold you stock I didn't own, so I shorted the stock to you. I am now short the stock. I have a position. I have a proprietary trade.

Let's say you're a big customer and you want to buy a ton of stock from me. I will go out and amass a huge position, because I'm going to facilitate you. I'm making a market for you. I'm taking a huge risk building up a position that you said you want to buy. What if you don't buy that position I've built up? What if I made up the fact that I had a customer that I needed to facilitate? What if I just wanted to pretend I was making a market but really wanted to amass a huge position to make money for my trading desk, for my bank, for my bonus pool?

How on earth are regulators going to know if banks are taking proprietary positions and just calling them client-related positioning or market-making? They aren't. It's a giant loophole.

Hedging? Let me say this about that. Hedging is when you have an at-risk position and you don't like the risk. So, instead of just dumping the risk position (which is better than hedging), which you may not be able to do or unwilling to do for any number of reasons, you put on a hedge. A hedge is another position that makes money if your other position loses money. A perfect hedge (which is very hard to accomplish) means you don't lose any money. You don't make money, but you don't lose money. An imperfect hedge will result in you probably losing some money, and once in a blue moon, you can make a little money on a hedge.

If you're a bank, though, you can make a ton of money on a hedge, or you can lose a ton of money on a hedge.

Why? Because you weren't really hedging. You were saying you were hedging. But you were taking another position with a lot of risk to make money on that part of your hedge.

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You weren't hedging. You were lying about hedging. You were prop trading.

That just happened. The JPMorgan "Whale" trade in London, the one that lost them $6.5 billion, that was a "hedge" trade. Yeah, that's what they called it. It was a hedge trade that went bad. That was a prop trade lipsticked-up and called a hedge trade.

Market-making and hedging are both loopholes. They will be used to prop trade. It's that simple.

Treasury Secretary Jacob Lew is pushing hard to get the Volcker Rule done by year-end, this year. But the Fed now wants to give banks until July 2015, instead of 2014, to implement whatever it looks like.

If the rule ends up being 1,000 pages, you can guess why it's that long. It's that long so that there will be enough fine-print loopholes in it to give banks what they want... the ability to prop trade and not call it proprietary trading.

The only thing I can tell you for sure about this pending Volcker Rule is this: When it comes out, I will read it and I will spell out for you where the loopholes are and how banks will use those loopholes.

That much I can promise you.

The Fed's Been Running the Printing Presses Nonstop... What Happens When They Stop? Deflation Is Coming (and It's Not What You Think)

Tesla Motors Inc (TSLA): Can Tesla Shares Recover From The Model S Burns?

Bears are haunting shares of Tesla Motors, Inc. (NASDAQ:TSLA) since the report of fire accident that damaged a Model S, triggering rumors that the vehicle's battery caused the incident. However, the company said that the particular Model S collided with a large metallic object in the middle of the road and caused significant damage to the vehicle.

It is unknown what actually happened, but this was enough to create panic selling among investors, dragging down the stock more than 6 percent and handing its steepest decline since mid-July 2013 when it fell 14 percent.

The accident (this is the first fire in a Tesla vehicle) comes after the National Highway Traffic Safety Administration (NHTSA) awarded Tesla's Model S the highest overall vehicle safety score ever, earning a new combined record of 5.4 stars.

The Model S, which is on-track to hit sales of over 20,000 units this year, is the best-selling U.S. electric car despite high starting price of $70,000 before a federal tax credit. The company sold 5,150 cars in the second quarter and expects to sell 21,000 cars this year.

The incident did some damage to Tesla's reputation of producing safe cars and doubts raised over its 85 kilowatt-hour lithium-ion battery, which is underneath the passenger compartment floor. The battery fire reminds investors of a similar issue with Boeing's new 787 plane.

Boeing Co. (NYSE:BA) still has not entirely come out of the fire risk in its ambitious plane that was grounded earlier this year as its lithium-ion batteries overheated or caught fire. Flights resumed four months later after a revamped battery system was installed. Last week, another Dreamliner was grounded after only a few weeks in service.

Even GM's Chevrolet Volt plug-in hybrid cars faced battery fires two years ago after crash-testing, but the regulators determined that the Volt was no  riskier than vehicles with conventional gasoline engines.

However, the incident dampened the Volt's reputation and reduced sales, whi! ch posted a recovery only recently. GM sold about 17,000 Volts through September.

Although Tesla has not completed a full analysis of the incident, they do believe that the battery pack was damaged in some way and was the cause of the fire. The company is expected to release a series of statements over the next few days, detailing their analysis and findings.

On the flip side, the negative news flow and investor concern over the impact to demand of this incident will put negative pressure on the stock in the near-term.

"These are meaningful concerns, as this is a new technology and one in which sensitivity to safety risk is very high," Deutsche Bank analyst Rod Lache wrote in a note to clients.

The fire happened after 83 million miles of Model S driving, 12 significant accidents, and extreme crash testing by U.S. Safety regulators. Although more details are needed on the exact reasons behind this incident, and it could certainly be best to eliminate the chance of a fire completely, Tesla believes that the frequency in which an accident propagates a fire is similar in an internal combustion vehicle.

Tesla's ability to monitor the vehicle systems remotely will enable a detailed report on the cause of the incident.

"If this had been a spontaneous incident with no catalyst (i.e. in someone's garage), the impact would be significantly worse, Given significant Roadster and Model S experience (6 years, tens of millions of miles driven) without a fire, we have confidence that this is an isolated incident that could happen to any vehicle," Lache said.

Like Lache, we hope  that this will be a one-off event for Tesla, and there should not be any repetitive incidents as is the case with Boeing.

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Moreover, shares of Tesla had rallied 517 percent in the last one year limiting further upside unless there are some real catal! ysts to p! ush the stock up. R.W. Baird analyst Ben Kallo, who downgraded the stock to "Neutral" from "Outperform," said that the company has "significant milestones" to overcome in the next year and a half.

As a result, the stock could be pressured in the near-term unless Tesla gives a detailed explanation of the incident to the satisfaction of the Street.

The Best and Worst Run States in America: A Survey of all 50

How well run is your state? It can be difficult to objectively assess the quality of a state's management. The economy and standard of living can be affected by decisions made decades ago, forces outside the control of the state's government and administrators, as well as the government’s own actions.

Every year, 24/7 Wall St. tries to answer this question by conducting an extensive survey of every state. To determine how well states are managed, we examined their financial data, as well as the services they provide and their residents’ standard of living. This year, North Dakota is the best-run state in the country for the second year in a row, while California is the worst-run for the third year in a row.

Identifying appropriate criteria to compare the 50 states can be challenging because they vary so much. Some states have abundant natural resources, while others rely on services or innovation. A few have been burdened by struggling industries. Some are more rural, while others are more urban. Because of such differences, a spending or tax policy that can be beneficial in one state can be disastrous in another.

Many of the best-run states in the nation benefit from an abundance of natural resources. North Dakota, Wyoming, Alaska, and Texas, among the best-run states, are all among the states with the greatest concentration of GDP in the mining industry, which includes activities such as oil and natural gas extraction, as well as coal mining. The presence of this industry benefits states in several ways. North Dakota and Texas led the nation in real GDP growth in 2012, while Alaska has used its oil revenue to establish a permanent fund that pays residents an annual dividend.

The housing crisis has had a major negative impact on a number of the worst-run states. It caused a drastic decline in construction employment in states like Arizona, California, and Nevada. Many of these lost jobs have yet to be replaced. In the hardest-hit states, this has resulted not only in worsening unemployment, but increased poverty and budget shortfalls. Although the economies of these states have largely improved, the residual effects of the housing crisis remain.

While these can be considered extenuating circumstances, the fact is that each state must deal with the cards it is dealt. Governments must plan for worst-case scenarios, including the collapse of an industry. Several resource-rich states have squandered their advantages and rank poorly on our list. Good governance involves raising and spending enough to provide for the well-being of the population without risking the state's long-term stability.

To determine how well the states are run, 24/7 Wall St. reviewed hundreds of data sets from dozens of sources. We looked at each state's debt, revenue, expenditure, and deficit to determine how well it was managed fiscally. We reviewed taxes, exports, and GDP growth, including a breakdown by sector, to identify how each state was managing its resources. We looked at poverty, income, unemployment, high school graduation, violent crime and foreclosure rates to assess the well-being of the state’s residents.

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While each state is different, the best-run states share certain characteristics, as do the worst run. For example, the populations of the worse-off states tended to have lower standards of living. Violent crime rates in these states were usually higher and residents were much less likely to have a high school diploma.

The worst-run states also tended to have better fiscal management reflected in higher budget shortfalls and lower credit ratings by Moody's Investors Service and Standard & Poors.

The better-run states tended to display stable fiscal management. Pensions were more likely to be fully funded, debt was lower, and budget deficits smaller. Credit ratings agencies also were much more likely to rate the well-run states favorably. Only two poorly run states received a perfect credit rating from either agency. California and Illinois, which are ranked worst and third worst, received the lowest ratings from both agencies.

The states that were well-managed also tended to have lower unemployment rates. Eight of the 10 states with the lowest unemployment rates ranked as the best-run states. California, Illinois, and Nevada — the states with the highest unemployment rates as of 2012 — were among the five worst-run states.

These are the best- and worst-run states in America.

5 Toxic Stocks to Sell Before It's Too Late

BALTIMORE (Stockpickr) -- Don't get distracted by cheers on Wall Street this week. While most investors are busy celebrating another set of all-time highs in the stock market, a handful of "toxic" stocks could be ravaging your portfolio returns.

Make no mistake -- I'm not warning you about an impending crash today. This column isn't my version of a cardboard sign that reads, "The end is near". In fact, I've made no bones about the fact that I've been bullish all year.

But there's a big difference between thinking that the broad market is going to move higher, and thinking that every single stock is going to go higher. It's the laggard names that will gut your performance if you aren't quick to unload them.

That's why we're taking a closer look at five "toxic stocks" you should be selling in November. To be fair, the companies I'm talking about today aren't exactly "junk."

By that, I mean they're not next up in line at bankruptcy court -- but that's frankly irrelevant. From a technical analysis standpoint, they're some of the worst-positioned names out there right now. For that reason, fundamental investors need to decide how long they're willing to take the pain if they want to hold onto these firms this summer. And for investors looking to buy one of these positions, it makes sense to wait for more favorable technical conditions (and a lower share price) before piling in.

For the unfamiliar, technical analysis is a way for investors to quantify qualitative factors, such as investor psychology, based on a stock's price action and trends. Once the domain of cloistered trading teams on Wall Street, technicals can help top traders make consistently profitable trades and can aid fundamental investors in better planning their stock execution.

So, without further ado, let's take a look at five "toxic stocks" you should be unloading.

Luxottica Group

First up is $25 billion eyewear stock Luxottica Group (LUX). Luxottica has posted some solid performance year-to-date, rallying more than 28% since the calendar flipped over to January. But this stock looks downright toxic right now. Here's why.

Luxottica is currently forming a bearish price setup called a descending triangle. The pattern is formed by a horizontal support level below shares at $51 and downtrending resistance to the topside. As shares bounce between those two technically significant price levels, LUX is getting squeezed closer to a breakdown below that $51 price floor. When that happens, we've got our sell signal in this fashion stock.

Declining volume over the course of the setup in LUX adds some confirmation to the trade, but the downtrend in relative strength is the real problem in this chart. LUX has been underperforming the broad market horrifically in the last quarter, and a move through the $51 level would sap a lot more buying pressure from shares.

If you still own LUX, look for that sell signal as your exit.

iRobot

Small-cap robotics maker iRobot (IRBT) is an interesting company with a very cool line-up of products -- that's part of what's spurred a huge 81% rally in 2013. But none of that changes the fact that shares look toxic this quarter. In fact, the valuation premium on IRBT means that it could take a bigger haircut before it finds a floor.

iRobot is currently forming the exact same setup as the one we're seeing in LUX: a descending triangle. For IRBT, support comes in at $32. If shares slip below that price, then it's time to unload shares.

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

That support level at $32 is a price where there had been an excess of demand of shares; in other words, it's a place where buyers were more eager to step in and buy shares at a lower price than sellers were to sell. That's what makes a breakdown below $32 so significant -- the move would indicate that sellers are finally strong enough to absorb all of the excess demand above that price level. Wait for that trigger before you sell.

HCP

You don't have to be an expert technical analyst to see what's going on in shares of health care REIT HCP (HCP). This stock is in stuck in a textbook downtrending channel. Fundamentally, there's a lot to like about this stock, but HCP is a good example of why it's never a good idea to chase yield; HCP may have a 5.29% annual dividend payout, but shares have lost more than that in the last month alone.

HCP's price channel has provided traders with a high-probability range for shares since the middle of the year. Despite the last four attempts at pushing through trendline resistance, shares have been swatted down on each attempt. And while HCP has been turning higher in the last few sessions, investors should look at trendline resistance at $42 with a lot of skepticism. That's probably the worst possible time to be a buyer.

Instead, it makes sense to sell near the trendline for a most efficient exit in HCP. Yes, trendlines do eventually break, but getting in now is a big mistake. After all "this time it's different" are probably the most expensive four words in the English language. As long as shares stay within that channel, sell the bounce.

Silicon Image

The exact same setup is shaping up in shares of small-cap semiconductor firm Silicon Image (SIMG). Like HCP, this firm is stuck trading in a downtrending channel. Unlike HCP, trendline resistance is a whole lot stronger in this stock. Shares have gotten swatted down on each of the last eight attempts through that ceiling; with shares at resistance again, the high-probability move is to the downside.

Again, relative strength has been terrible since the summer; SIMG is underperforming the S&P by a considerable margin. Downtrending relative strength is a cardinal sin for stocks, so with shares sitting at resistance, now's a stellar place to be a seller. While support has been pretty strong along the way down, SIMG's previous penetrations through S1 should be a big red flag that buyers are skittish.

SIMG is in a textbook downtrend right now. Don't get caught on the wrong side of the trade.

LKQ

Last up on our list of toxic names is LKQ (LKQ), a $10 billion auto parts stock. Even though it's been a strong year for auto names, LKQ is starting to look "toppy" thanks to a prominent reversal pattern that's been shaping up in shares. While it's still early to suggest selling (or shorting) LKQ, shareholders should start thinking defensively here.

LKQ is currently forming a head and shoulders top, a bearish reversal setup that indicates exhaustion among buyers. The setup 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 $31 at the moment for LKQ. If this stock can't catch a bid at $31, unload it.

Lower highs in momentum add some extra confidence to the bear bias in LKQ this fall. Despite the pop shares have seen in the last few days, 14-day RSI can't break its downtrend. Hopeful bulls take note: this pattern gets invalidated on a move above the head at $33.

To see this week's trades in action, check out the Technical Setups for the Week portfolio on Stockpickr.

-- Written by Jonas Elmerraji in Baltimore.

Commitments of Traders - August 30, 2013

As summer begins its final weeks in the northern hemisphere, several markets have shown interesting COT data viewed over the last several reports. Grains and oilseeds have seen non-commercials commit to the long side and copper could be at one of the turning points I have noted in previous posts.

This RadarScreen capture shows the net change in the net non-commercial position, expressed as a percent of the total non-commercial open interest, in the Commitments of Traders (COT) data released Friday, August 30.

Top 5 Dividend Stocks To Own For 2014

This indicator and more information about COT reports are available in the Analysis Concepts paper titled "Commitments of Traders: Breaking Down the Open Interest." As detailed in the paper, the intention is to follow the money flow of large speculators: money managers, hedge funds, etc.

You can read more of this blog here. Written by Stanley Dash, VP, Applied Technical Analysis, TradeStation. Follow TradeStation

Biotech News Watch: Bubble Talk, Biotech IPO Setbacks and More (XON & TNIB)

Bubble talk, biotech IPO setbacks plus news about small cap biotechs like Intrexon Corp (NYSE: XON) and TNI BioTech (OTCMKTS: TNIB) have dominated biotech news this week or in recent weeks. Just consider the following news:

Why There is No Biotech Bubble & Where to Look for Value in Biotech. Marshall Gordon, the Director and senior health-care analyst of ClearBridge Investments, was recently interviewed by Barron's where he stated his belief that there is no biotech bubble because biotech stocks have delivered new drugs and have shown an ability to innovate. With that said, he added that the sector got ahead of itself while some biotechs suffered setbacks plus hedge funds decided to trim risk from their portfolios. Nevertheless, Marshall likes or is watching mid cap biotechs BioMarin Pharmaceutical Inc (NASDAQ: BMRN) and Pharmacyclics, Inc (NASDAQ: PCYC) along with small cap biotechs Pacira Pharmaceuticals Inc (NASDAQ: PCRX) and Clovis Oncology Inc (NASDAQ: CLVS). He also added that recent biotech IPOs have been lesser quality names than earlier offerings. A Trio of Biotech IPO Setbacks. FierceBiotech has summarized how a trio of biotech IPO have suffered setbacks. Specifically, Relypsa (NASDAQ: RLYP), a late-stage biotech developing a treatment for hyperkalemia, slashed its asking price on 6.9 million shares to $12 a share to raise $82 million from a range of $16 to $19 a share while Xencor (NASDAQ: XNCR), a biotech developing antibodies for severe autoimmune/allergic diseases and cancer, has dropped its IPO price to $7 a share to raise $75 million from a range of $14 to $16. Meanwhile, Celladon, which is developing a first-in-class gene therapy for patients with systolic heart failure, has postponed its IPO citing poor market conditions. Coming Biotech IPOs. Nevertheless, FierceBiotech has noted that GeNO Healthcare (NASDAQ: GNO) is looking to raise $50 million for its new, patient-friendly approach for delivering inhaled nitric oxide on the go plus Dutch biotech uniQure is apparently positioning itself to go public after pioneering the world's first approved gene therapy. David Einhorn Likes Intrexon Corp. Greenlight Capital Inc, a hedge fund managed by billionaire David Einhorn, has added 2,176,868 shares of small cap Intrexon Corporation, a biotech company that issued stock to the public last August. Intrexon Corporation is a biotechnology company focused on collaborating with companies in Health, Food, Energy and the Environment to create biologically based products. It should be mentioned that Intrexon Corporation reported net income of $15.4 million verses a net loss of $20.5 million last week and that the IPO raised approximately $168.3 million. TNI BioTech. Small cap TNI BioTech, which acquires patents, develops treatments, markets and licenses immunotherapies for the treatment of cancer, HIV/AIDS and autoimmune diseases, has been producing a steady stream of news lately. For starters, TNI BioTech recently announced that its subsidiary, TNI BioTech International, Ltd., has a distribution agreement with a Nigerian company called AHAR Pharma to market Lodonal™ in Nigeria for the treatment of autoimmune diseases and cancer. TNI BioTech says the deal will generate just over $53,000,000 in gross revenue for the company in 2014 with approximate $21,000,000 in available cash flow to meet TNIB's financial clinical trial commitments plus AHAR Pharma has pre-paid for the API necessary for the soft launch and has committed to purchase a minimum of $1,000,000 worth of capsules between now and January 2014. In addition, TNI BioTech has announced a manufacturing and supply agreement with Laboratorios Ramos for the production of Low Dose Naltrexone ("LDN") and has provided a financing update which noted the receipt of $826,250 as consideration for the exercise of previously-issued warrants and $531,250 for the purchase of common stock under the Private Placement (for an aggregate sum of $1,357,500).

One must-buy dividend stock

BreitBurn Energy Partners (ticker: BBEP ) recently reported a terrific third quarter. Oil and gas production hit a record, and is up 43% year-over-year. The company's focus on high-margin oil growth has really paid off, as it represents 61% of total production.

This oil-rich production is falling right to the bottom line. Last quarter the company reported that it was able to earn 30% more than it paid its investors in distributions. That said, if there was one concern about the company, it's the fact that it has put on a lot of debt this year. The company really stretched its limits when it made a big oil deal this summer that was funded completely with debt.

At the time of that deal, BreitBurn's units were under pressure; it was swept up in the same negativity as LINN Energy (ticker: LINE ) and LinnCo (NASDAQ: LNCO ) when it was called "LINN Energy Junior", while its distribution was called a "mirage." Times certainly have changed, as LINN Energy seems to have basically been cleared to continue with business as usual. That has fueled a recovery in the price of LINN Energy's units and LinnCo's shares. It is a recovery that has also affected units of BreitBurn.

It was only a matter of time before BreitBurn took advantage of this recovery in its units to raise equity. In my third-quarter review, I said that one thing "investors should expect to see at some point in the future is an equity raise." That's why it comes as no surprise to see BreitBurn doing just that.

The company announced that it would offer to sell upwards of 17 million units, which could raise over $300 million for the company. If it sells that many units the distribution coverage ratio would drop from 1.3 times to 1.13 times, which is still very solid. In fact, to put that into perspective, LINN Energy's current coverage ratio is just at 1.0 times.

Another point of reference: BreitBurn's coverage ratio will still be higher than Vanguard Natural Resources (NASDAQ: VNR ) , which has a ratio of 1.09 times. Va! nguard is regarded as the most conservative of the three because it doesn't invest any capital to grow organically, instead acquiring its growth.

For BreitBurn to continue growing it needed to raise equity capital. The company only had about $300 million left on its credit facility, and its leverage ratio was just slightly below four times. BreitBurn has said repeatedly that it wants to get its leverage ratio closer to three times. By raising close to $300 million it should push its leverage ratio down to about 3.3 times, which, while not at its stated goal, is a much more comfortable ratio.

All of this is to say that BreitBurn's more than 10% distribution is rock-solid and one worth buying today. This is a company that has plenty of room to grow its payout, and, with a history of 14 straight quarters of distribution raises, BreitBurn's payout will keep going higher. Not only that: starting next year, it will move to a monthly distribution payment schedule. Add it all up, and BreitBurn is a must buy for investors looking for a rock-solid high yield.

The Motley Fool is a USA TODAY content partner offering financial news, analysis and commentary designed to help people take control of their financial lives. Its content is produced independently of USA TODAY.

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Will General Motors Move Higher?

With shares of General Motors (NYSE:GM) trading around $37, is GM 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

General Motors designs, manufactures, and markets cars, crossovers, trucks, and automobile parts worldwide. The company markets its vehicles primarily under the Buick, Cadillac, Chevrolet, GMC, Opel, Holden, and Vauxhall brand names, as well as under the Alpheon, Jiefang, Baojun, and Wuling brand names. It sells cars and trucks to dealers for consumer retail sales as well as to fleet customers in daily rental car companies, commercial fleet customers, leasing companies, and governments.

General Motors announced third-quarter net income to common stockholders of $0.7 billion or 45 cents per fully diluted share, down from $1.5 billion or 89 cents per fully diluted share a year ago. Improvement in operating performance during the quarter was more than offset by a net loss from special items and incremental tax expense. "We made gains in the third quarter as we improved our North American margins and increased our global share on the strength of our Chevrolet brand,” said Dan Akerson, GM’s chairman and CEO.

T = Technicals on the Stock Chart Are Strong

General Motors stock has been surging higher in the past couple of years. The stock is currently trading near highs for the year and looks poised 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, General 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 General Motors options may help determine if investors are bullish, neutral, or bearish.

	Implied Volatility (IV)	30-Day IV Percentile	90-Day IV Percentile
General Motors Options	27.78%	Hot Growth Companies For 2014 0%	0%

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

	Put IV Skew	Call IV Skew
November Options	Flat	Average
December Options	Flat	Average

As of Wednesday, 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 minimal 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 General Motors’s stock. What do the last four quarterly earnings and revenue growth (Y-O-Y) figures for General Motors look like and, more importantly, how did the markets like these numbers?

	2013 Q3	2013 Q2	2013 Q1	2012 Q4
Earnings Growth (Y-O-Y)	-49.44%	-16.67%	-3.33%	6.49%
Revenue Growth (Y-O-Y)	3.72%	3.88%	-2.32%	3.47%
Earnings Reaction	3.46%*	-1.1%	3.01%	0.03%

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

*As of this writing.

P = Weak Relative Performance Versus Peers and Sector

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

	General Motors	Ford	Toyota	Tesla	Sector
Year-to-Date Return	29.52%	34.21%	39.68%	370.10%	35.47%

General Motors has been a poor relative performer, year to date.

Conclusion

General Motors continues to change its business as it looks to entice companies and consumers with its new and improved vehicles. The company’s performance during the quarter was more than offset by a net loss from special items and an incremental tax expense.  The stock has been surging higher in recent quarters and is now trading near highs for the year. Over the last four quarters, earnings have been decreasing while revenues have been rising, which has pleased investors in the company. Relative to its peers and sector, General Motors has been a weak year-to-date performer. Look for General Motors to catch up and OUTPERFORM.

Why Weakness at Cisco Systems May Hurt These Top Tech Stocks Soon

Despite the fact that Cisco Systems Inc. (NASDAQ: CSCO) actually reported revenues in line with street expectations last week, the network giant guided fiscal first quarter 2014 below the consensus of $12.45 billion. Management was cautious in guidance even after a the book-to-bill ratio was over 1. Given Cisco's tempered outlook, more cautious tone and heightened expectations throughout the supply chain (with valuations to match), the technology analysts at Oppenheimer look for semiconductor and component suppliers aligned with Cisco to trade lower. Here are the names that investors need to keep a close eye on.

Cavium Inc. (NASDAQ: CAVM) generates 18% of their revenue from their association with Cisco. While the company had solid earnings and beat analysts estimates, the coming quarters could prove more difficult. The Thomson/First Call price target is $39.50.

Applied Micro Circuits Corp. (NASDAQ: AMCC) also has a high single digit exposure to Cisco Systems. Applied Micro's product portfolio and continued efforts to provide maximum consumer satisfaction have augmented its market position. The integrated offload engines and advanced PacketPro architecture offer quality service and security and performance to its customers. The consensus price target for the stock stands at $13.

Broadcom Corp. (NASDAQ: BRCM) has single digit exposure to Cisco, and may be able to temper lower orders with an upswing in orders for chips for smartphones. The company’s once-strong mobile/wireless business grew 7%. Ordinarily this would have been considered a solid performance. In this case it fell short of Street expectations by almost 10%. The consensus price target for the stock is $35, and investors are paid a 1.7% dividend.

Freescale Semiconductor Ltd. (NYSE: FSL) also has a less than 10% exposure in sales to Cisco. With a large percentage of sales, totaling close to 30% to the growing automotive sector, Freescale may be able to dodge lower orders for its digital networking chips. The consensus price target for the stock is $19.

LSI Corp. (NASDAQ: LSI) supplies Cisco with application specific integrated circuits (ASIC) for a variety of high-end gear, and also indirectly sells into its Scientific Atlanta division by supplying chips for disk drives that end up in DVRs. The consensus price objective for the stock is $9. Investors are paid a 1.7% dividend.

Marvell Technology Group Ltd. (NASDAQ: MRVL) sells Cisco switch and system controllers and also sells indirectly through other vendors to Scientific Atlanta, the set top box maker. The consensus price target is put at $12. Investors are paid a 1.8% dividend.

Mindspeed Technologies Inc. (NASDAQ: MSPD) provides voice over internet protocol (VOIP) infrastructure and some telecom chips, which account for about 10% of sales. This could disrupt earnings at a micro cap tech company. The consensus price target for the stock is $3.75.

STMicroelectronics NV (NYSE: STM) supplies most set-top box chips for Scientific Atlanta, and also sells chips for disk drives that end up in DVRs; but still has less than a 10% exposure. The consensus target for the stock is $11. Investors do receive an outstanding 4.0% dividend from the company.

Texas Instruments Inc. (NASDAQ: TXN) also supplies VOIP chips to Cisco, but their sales to the company amount to a very small percentage which is not expected to hurt overall performance. The consensus price target for the venerable tech company is $38. Shareholders are paid a 2.9% dividend.

Xilinx Inc. (NASDAQ: XLNX) was recently raised to an overweight rating at Morgan Stanley (NYSE: MS) and should be able to contain any earnings degradation as a result from lowered orders from Cisco. The consensus price target for the stock stands at $47, and investors are paid a 2.2% dividend.

Cisco was relatively more cautious than in recent quarters and indicated increasingly mixed trends with strength in U.S. enterprise and headwinds in service providers in Europe and China. Through the mixed commentary, a focus on scalable data centers and an ongoing shift to intelligent networking, cloud infrastructure and mobility remain medium and long-term positives for the company. The sell-off in Cisco and any of its vendors may provide investors with very attractive entry points for future gains.

An Immunotherapy Cinderella Story? (AMGN, DNDN, TNIB)

When investors think "immunotherapy", they tend to think of companies like Amgen, Inc. (NASDAQ:AMGN) or Dendreon Corporation (NASDAQ:DNDN). And well they should. Dendreon was the first biotech outfit to come up with a big - and approved - potential game-changer (prostate cancer therapy Provenge) in the immunotherapy world, and the deep-pocketed Amgen is turning heads with T-Vec - an immunotherapy that fights tumors, currently in Phase 3 trials. Sometimes though, being big or being the first to market doesn't necessarily make a stock an investment-worthy ticker. Sometimes it's the little guy that actually has the better technology, and learns from the mistakes made when other biotechnology companies may have rushed in, if not with relatively ineffective medicines, than at least errors in judgment. TNI Biotech Inc. (OTCMKTS:TNIB) may well be one of those "second wave" names that isn't getting a lot of attention now, but has an immunotherapy in the works that could up-end bigger players like DNDN or AMGN.

First and foremost (and to give credit where it's due), kudos to Dendreon as well as Amgen. Dendreon's Provenge was the first cancer immunotherapy to hit the market, and even if Amgen never has any intentions of introducing a cancer immunotherapy, it would still be one of the pharma market's most successful companies. Still, with more than two years of sales-time under its belt, it's fairly clear that either Provenge (at $96,000 per patient) is too costly and/or too ineffective to draw a real buying frenzy, while Amgen's first tumor immunotherapy, T-Vec, only showed significant improvement in treatment outcomes with a small set of melanoma patients; stage 3 patients observed a 33% improvement in response, versus less impressive responses for patients with other stages of cancer. And, there were serious adverse reactions with about twice as many T-Vec takers as there were compared to the control group.

Hot Bank Stocks To Watch Right Now

Though the underlying biotechnology is worth studying in the future, we now know there's still some work to be done on both fronts. Enter TNI Biotech.

While most investors may understand that cancer immunotherapy is the art and science of tweaking a patient's own immune system to fight an ailment on its own (agreed by most everyone that this could be the most potent way to fight any cancer), what most investors don't realize is just how complicated the human body's immune system is. The biopharma industry sill doesn't know as much as it does know about it, and it still discovering how and where those tweaks can be and should be made. It's entirely possible for an unknown, small company like TNI Biotech Inc. to be sitting on the breakthrough that most investors might expect an Amgen or a Dendreon to make. In fact, it's starting to look that way already.

The work TNI Biotech is doing focuses on LDN (low-dose naltrexone) and MENK (methionine-enkephalin). These two drugs have been shown to boost and even restore an immune system simply by increasing the T and NK cell count, which prompts a person's internal immune response. What's so compelling about LDN and MENK is their adaptability. They're believed to be more "core" to a person's own defenses, and therefore may create a more foundational and more effective immune response. Said a different way, while Amgen or Dendreon may be landing punches all around the target, TNIB may be landing them right on the bulls-eye... perhaps without even realizing it yet.

More work needs to be done to be sure, but TNI Biotech is doing that work. Indeed, it's already done or acquired much of that work. It's ready to start phase 3 trials of LDN as a treatment for Crohn's. It's near-ready to start phase 2 trails of LDN as a therapy for multiple sclerosis. Trials of MENK as a treatment for cancer are near-ready to begin phase 2 as well. Not bad for a $137 million company nobody saw coming, or a company that most people still don't see coming. It just goes to show you that good things can come in small packages.

While TNI Biotech is certainly willing and able to go the distance with all of its planned trials, odds are good it would be acquired before even needing to do so - "big pharma" is still looking to fill up its depleted pipeline. You can learn more about TNI Biotech at its website.

Will US Airways See a Rise from a Potential Deal?

With shares of US Airways (NYSE:LCC) trading around $16, is LCC 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

US Airways operates and owns passenger and freight airline carriers. Consumers and companies across the nation are now looking to travel at an increasing rate. Since air travel is quicker and less expensive, it is becoming a common transportation method for many. As costs decrease and flights become more efficient, look for business and retail customers to fly more than ever.

US Airways, AMR Corp., and the Justice Department all said they would be open to reaching a settlement in which the Depart of Justice (DoJ) would stop its attempts to block a planned merger between the two airlines. According to a document filed by the parties and seen by Street Insider, the DoJ said it would be open to allowing the merger to go through if the airlines make antitrust concessions. The airlines, especially the bankrupt AMR Corp.-owned American, want the trial to start in November, but the DoJ has requested a March start date.

T = Technicals on the Stock Chart Are Mixed

US Airways stock has struggled year-to-date. The stock is currently trading near the lower-end of its yearly trading range. 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, US Airways is trading between its 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 US Airways options may help determine if investors are bullish, neutral, or bearish.

	Implied Volatility (IV)	30-Day IV Percentile	90-Day IV Percentile
US Airways Options	44.91%	50%	47%

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	Steep	Average
October Options	Steep	Average

As of today, there is an average demand from call buyers or sellers and high demand by put buyers or low demand by put sellers, all neutral to bearish over the next two months. To summarize, investors are buying a significant amount of call and put option contracts and are leaning neutral to bearish 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 Mixed 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 US Airways’s stock. What do the last four quarterly earnings and revenue growth (Y-O-Y) figures for US Airways 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)	-9.09%	-7.14%	63.41%	202.40%
Revenue Growth (Y-O-Y)	2.96%	3.45%	3.90%	2.82%
Earnings Reaction	2.49%	5.02%	1.48%	2.31%

US Airways has seen mixed earnings and rising revenue figures over the last four quarters. From these numbers, the markets have been pleased with US Airways’s recent earnings announcements.

P = Weak Relative Performance Versus Peers and Sector

How has US Airways stock done relative to its peers Southwest Airlines (NYSE:LUV), Delta Air Lines (NYSE:DAL), United Continental (NYSE:UAL), and sector?

	US Airways	Southwest Airlines	Delta Air Lines	United Continental	Sector
Year-to-Date Return	18.07%	24.41%	64.87%	22.33%	19.86%

US Airways has been a poor relative performer, year-to-date.

Conclusion

US Airways is an airline that operates passenger and freight planes. The company, AMR Corp., and the Department of Justice are currently attempting to reach a settlement regarding the US Airways and AMR Corp. merger. The stock has struggled this year and is currently trading near the lower-end of its yearly range. Over the last four quarters, earnings have been mixed while revenues have been rising which have pleased investors in the company. Relative to its peers and sector, US Airways has been a weak year-to-date performer. WAIT AND SEE what US Airways does this coming quarter.

Top 5 Financial Stocks For 2014

Two of my 35 stocks have short interest ratios over 10 days. [Short interest ratio = amount of shares shorted / average daily volume.] I look at this statistic, and force myself to re-examine companies where the ratio is over 10. Maybe there is something that I don't know.

The two stocks in question are Stancorp Financial (SFG) and National Western Life Insurance (NWLI). The short cases for both are based on a naive view of how insurance companies work.

Stancorp is a disability insurer. Disability insurers often do badly in a recession because disability claims increase - people who are unemployed claim they are disabled.

There are two models for disability insurance: 1) Underwrite carefully, and pay all legitimate claims. 2) Accept all business, but when claims come in litigate with vigor.

Stancorp follows the first model. I would never own an insurer that followed the second model, it is dishonest, and it is bad business. Because Stancorp does its risk management up front, it does not get the same degree of unemployment masquerading as disability claims. But the shorts don't get this. Thus the short interest ratio near 20.

Top 5 Financial Stocks For 2014: Envestnet Inc(ENV)

Envestnet, Inc. provides technology-enabled, Web-based investment solutions and services to financial advisors. The company?s technology platform provides financial advisors with a series of integrated services, including risk assessment and selection of investment strategies, asset allocation models, research and due diligence, portfolio construction, proposal generation and paperwork preparation, model management and account rebalancing, account monitoring, customized fee billing, overlay services covering asset allocation, tax management and socially responsible investing, and aggregated multi-custodian performance reporting and communication tools, as well as access to a wide range of leading third-party asset custodians. It also offers Web-based access to a range of technology-enabled investment solutions, including separately managed accounts (SMAs), which allow advisors to offer their investor clients a managed portfolio of securities with a personalized tax basis; unified managed accounts (UMAs) that allow the advisor to use various types of investment vehicles in one account; advisor-directed portfolios, where advisors create, implement, and maintain their own investment portfolio models to address specific client needs; mutual funds and portfolios of exchange-traded funds (ETFs); and access to a range of investment managers and investment strategists. The company was founded in 1999 and is headquartered in Chicago, Illinois.

Advisors' Opinion:

• [By Monica Wolfe]

  Envestnet (ENV)

  During the second quarter, Columbia Wanger increased their position in Envestnet by 187.59%. The fund purchased a total of 511,394 shares at an average price of $20.28 per share. Since their addition, the price per share has increased approximately 26%.

• [By Evan Niu, CFA]

  What: Shares of Envestnet (NYSE: ENV  ) have jumped today by as much as 13% after the company said it closed the acquisition of Prudent Wealth Management Solutions, or WMS.

• [By Jake L'Ecuyer]

  Envestnet (NYSE: ENV) was also up, gaining 15.06 percent to $34.03 after the company priced 5,045,215 shares of common stock at $29.25 per share by selling shareholders.

Top 5 Financial Stocks For 2014: Camden National Corporation(CAC)

Camden National Corporation operates as the holding company for Camden National Bank, which provides commercial and consumer banking products and services to the individuals, businesses, municipalities, non-profits, and commercial customers. The company offers various deposit products, including NOW accounts, transaction accounts, time deposits, savings accounts, money market accounts, certificates of deposit, brokered deposits, and demand deposits. Its loan products comprise residential mortgage loans, commercial business loans, commercial real estate loans, and various consumer loans. The company offers its products and services through a network of 37 banking offices and ATMs in the Maine counties of Androscoggin, Cumberland, Franklin, Knox, Lincoln, Penobscot, Piscataquis, Somerset, Waldo, and York. In addition, it operates nine Union Trust branches in Hancock and Washington counties, Maine. The company, through Acadia Financial Consultants, provides full-service broke rage and insurance services, including college, retirement, estate planning, mutual funds, strategic asset management accounts, and variable and fixed annuities. Camden National Corporation, through its subsidiary, Acadia Trust, N.A., offers various trust, trust-related, investment, and wealth management services, as well as retirement and pension plan management services to individual and institutional clients. The company was founded in 1875 and is headquartered in Camden, Maine.

Advisors' Opinion:

• [By Eric Volkman]

  Camden National (NASDAQ: CAC  ) has elected not to change its dividend policy for the moment. The company declared a quarterly payout of $0.27 per share, to be handed out on July 31 to shareholders of record as of July 15. That amount matches the company's previous distribution, which was dispensed at the end of April. Before that, Camden National paid a regular distribution of $0.25 per share in every quarter stretching back to April 2008.

• [By Sarah Jones]

  National benchmark indexes climbed in all 18 western European markets, except Greece. The U.K.�� FTSE 100 increased 2 percent and Germany�� DAX rallied 2.4 percent. France�� CAC 40 (CAC) jumped 3.6 percent for the biggest gain since August.

Top Energy Companies To Watch For 2014: Cathay General Bancorp(CATY)

Cathay General Bancorp operates as the holding company for Cathay Bank, which offers various commercial banking products and services for individuals, professionals, and small to medium-sized businesses primarily in California. Its deposit products include passbook accounts, checking accounts, money market deposit accounts, certificates of deposit, individual retirement accounts, college certificates of deposit, and public funds deposits. The company?s loan portfolio comprises commercial mortgage loans, commercial loans, small business administration loans, residential mortgage loans, real estate construction loans, and home equity lines of credit. It also offers installment loans to individuals for automobile, household, and other consumer expenditures. In addition, the company provides trade financing, letters of credit, wire transfers, forward currency spot and forward contracts, traveler?s checks, safe deposit, night deposit, social security payment deposit, collecti on, bank-by-mail, drive-up and walk-up windows, automatic teller machines, Internet banking, and other customary bank services. As of April 20, 2011, Cathay General Bancorp operated 31 branches in California, 8 branches in New York State, 1 branch in Massachusetts, 2 branches in Texas, 3 branches in Washington State, 3 branches in the Chicago, Illinois area, 1 branch in New Jersey, and 1 branch in Hong Kong, as well as a representative office in Shanghai and in Taipei. The company was founded in 1961 and is headquartered in Los Angeles, California.

Top 5 Financial Stocks For 2014: Federal Home Loan Mortgage Corp (FMCC)

Federal Home Loan Mortgage Corporation (Freddie Mac) conducts business in the United States residential mortgage market and the global securities market. The Company operates in three segments: Single-family Guarantee, Investments, and Multifamily. The Single-family Guarantee segment reflects results from the Company's single-family credit guarantee activities. The Investments segment reflects results from the Company's investment, funding and hedging activities. The Multifamily segment reflects results from the Company's investment (both purchases and sales), securitization, and guarantee activities in multifamily mortgage loans and securities. The Company conducts its operations in the United States and its territories.

Single-Family Guarantee Segment

In the Company�� Single-family Guarantee segment, it purchases single-family mortgage loans originated by the Company�� seller/servicers in the primary mortgage market. The Company uses the mortgage securitization process to package the purchased mortgage loans into guaranteed mortgage-related securities. The Company guarantees the payment of principal and interest on the mortgage-related security in exchange for management and guarantee fees. The Company�� customers are lenders in the primary mortgage market that originate mortgages for homeowners. These lenders include mortgage banking companies, commercial banks, savings banks, community banks, credit unions, Housing Finance Agency (HFAs), and savings and loan associations. The Company�� customers also service loans in its single-family credit guarantee portfolio.

Mortgage securitization is a process, by which the Company purchase mortgage loans that lenders originate, and pool these loans into mortgage securities that are sold in global capital markets. The United States residential mortgage market consists of a primary mortgage market that links homebuyers and lenders and a secondary mortgage market that links lenders and investors. The Company part! icipates in the secondary mortgage market by purchasing mortgage loans and mortgage-related securities for investment and by issuing guaranteed mortgage-related securities. In the Single-family Guarantee segment, it purchase and securitize single-family mortgages, which are mortgages that are secured by one- to four-family properties. The types of mortgage-related securities it issue and guarantee include PCs, REMICs and Other Structured Securities and Other Guarantee Transactions. The Company also issue mortgage-related securities to third parties in exchange for non-Freddie Mac mortgage-related securities. The non-Freddie Mac mortgage-related securities are transferred to trusts that were specifically created for the purpose of issuing securities, or certificates, in the Other Guarantee Transactions.

Investments Segment

In the Company�� Investments segment, it invests principally in mortgage-related securities and single-family performing mortgage loans, which are funded by other debt issuances and hedged using derivatives. In the Company�� Investments segment, it also provides funding and hedging management services to the Single-family Guarantee and Multifamily segments. The Company�� customers for its debt securities predominantly include insurance companies, money managers, central banks, depository institutions, and pension funds. The Company funds its investment activities by issuing short-term and long-term debt. The Company�� PCs are an integral part of its mortgage purchase program. The Company�� Single-family Guarantee segment purchases many of its mortgages by issuing PCs in exchange for those mortgage loans in guarantor swap transactions. The Company also issue PCs backed by mortgage loans that it purchased for cash.

Multifamily Segment

The Company�� multifamily segment issues Other Structured Securities, but does not issue REMIC securities. The Company multifamily segment also enters into other guarantee commitments for mult! ifamily H! FA bonds and housing revenue bonds held by third parties. The Company acquires a portion of its multifamily mortgage loans from several large seller/servicers.

The Company competes with Federal National Mortgage Association (Fannie Mae), Government National Mortgage Association (Ginnie Mae), Mae Federal Housing Administration/the United States Department of Veteran Affairs (FHA/VA) and Federal Home Loan Bank (FHLB).

Advisors' Opinion:

• [By Lauren Pollock]

  J.P. Morgan Chase & Co. agreed to pay $5.1 billion to settle a lawsuit brought by the regulator of mortgage-finance companies Fannie Mae(FNMA) and Freddie Mac(FMCC). The pact with the Federal Housing Finance Agency includes $4 billion to settle a lawsuit alleging the bank misled Fannie and Freddie about�the quality of securities J.P. Morgan and two other banks it later acquired had sold to the housing-finance giants during the housing boom.

• [By Dan Caplinger]

  To its credit, FHFA specifically addresses the moral hazard involved in the Streamlined Modification Initiative. The agency notes that "because many borrowers who miss one or two payments have a temporary hardship and often reinstate their mortgage to current status, it is most effective to target borrowers who are at least 90 days delinquent." Moreover, in its efforts to curb abuse of the program, the FHFA notes that Fannie Mae (NASDAQOTCBB: FNMA  ) and Freddie Mac (NASDAQOTCBB: FMCC  ) , which the FHFA oversees, have "existing proprietary screening measures to prevent strategic defaulters from taking advantage of a Streamlined Modification."

• [By Dan Caplinger]

  Interestingly, though, this analysis doesn't mention an important factor: Increasingly over the past decade, major mortgage lenders haven't held onto their loans but rather have sold them on to government-sponsored enterprises Fannie Mae (NASDAQOTCBB: FNMA  ) and Freddie Mac (NASDAQOTCBB: FMCC  ) . During the housing boom, mortgage lenders Bank of America (NYSE: BAC  ) and Citigroup (NYSE: C  ) didn't perform as well as they did because they were securing particularly high margins on their mortgage loans. Rather, they collected transaction-based income by immediately reselling conforming loans to Fannie and Freddie, often retaining streams of income from risk-free mortgage-servicing rights without keeping any liability for potential loan default. Even now, Wells Fargo (NYSE: WFC  ) relies on strength in mortgage-related income, and decreases in refinancing activity pose a threat to income growth in future quarters -- although unlike many of its peers, Wells has actually retained a good portion of its loans on its own books.

• [By Alex Planes]

  While the rest of the market was freaking out about solar stocks and electric cars, the common stocks of America's two most notable housing government-sponsored enterprises (GSEs) languished. Of course, this was almost certainly because both Fannie Mae (NASDAQOTCBB: FNMA  ) and Freddie Mac (NASDAQOTCBB: FMCC  ) were placed in conservatorship as the economy melted down in 2008, which has left common shareholders without a means of redress or indeed without any expectation of sharing in the fruits of recovery. But come March, the stocks began shooting up, and they've shot up again this month. What's going on?

Top 5 Financial Stocks For 2014: Central Bancorp Inc(CEBK)

Central Bancorp, Inc. operates as the holding company for Central Co-operative Bank, which provides a range of banking products and services in the northwestern suburbs of Boston, Massachusetts. The company offers various deposit products, including demand deposit accounts, NOW accounts, money market deposit accounts, regular savings accounts, term deposit accounts, and retirement savings plans. Its loan portfolio comprises residential mortgage loans, commercial real estate and construction loans, home equity lines of credit, commercial and industrial loans, and consumer and other loans. The company also provides automated teller machines, Internet banking, preauthorized payment and withdrawal systems, tax-deferred retirement programs, and other miscellaneous services, such as money orders, travelers? checks, and safe deposit boxes. Central Bancorp operates nine full-service office facilities in Somerville, Arlington, Burlington, Chestnut Hill, Medford, Melrose, and Wobur n, Massachusetts; and a limited service high school branch in Woburn, Massachusetts. It also operated an automated teller machine in Somerville, Massachusetts. The company was founded in 1915 and is headquartered in Somerville, Massachusetts.