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Adam Sarhan MarketWatch Quote: This stock selloff has everyone talking about ‘divergence’

Market WatchNEW YORK (MarketWatch) — Strategists have few pat answers to explain the carnage across U.S. stocks on Thursday, but it’s clear that concerns over divergences within and between markets is taking a toll on investor sentiment.
“I think its’ a confluence of catalysts occurring,” said Adam Sarhan, chief executive of Sarhan Capital, in a phone interview.
Investors are again growing uneasy over what will happen when the Federal Reserve withdraws quantitative easing, he said. Other pressures include long-standing but recently dormant geopolitical fears as well as internal divergences between suffering small-cap stocks and the broader market and technical factors, including the S&P 500 index’s fall through its 50-day moving average. See: Stock market live blog for a rundown of other potential catalysts cited by strategists.
The tone also wasn’t helped by remarks by Iraq’s prime minister, who warned of potential plots by Islamic State to launch terror attacks on subway systems in New York and Paris.
The Dow Jones Industrial Average DJIA, -1.37%  remains down more than 240 points, or 1.4%, at 16,968.49, while the S&P 500 SPX, -1.40%  has shed a similar amount percentage-wise to trade at 1,969.64. The Dow and S&P are suffering the biggest one-day declines since July 31. The Nasdaq Composite COMP, -1.77%  is off 1.8% at 4,473.80.
Gold, which has suffered a bruising September beat-down, initially jumped as buyers flocked to safe haves like the yellow metal. The December futures contract GCZ4, +0.37%  remains up $1.30, or 0.1%, at $1,220.80 an ounce.
“It is not clear what caused this sudden shock to the system, but it serves as a reminder about the dangers of complacency – especially for the bulls in the case of stocks and the bears in the case of precious metals,” said Fawad Razaqzada, technical analyst at Forex.com, in a research note.
That said, worries about “divergence” seem to be a consistent theme among investors and strategists.
Indeed, small-cap stocks, as measured by the Russell 2000 RUT, -1.50% have been hit hard, with the index down 4.5% for the year to date. A “death cross” pattern, which is formed when the 50-day moving average falls below the 200-day moving average, on the index’s daily technical chart has sparked debate among technical analysts over the index’s outlook.
“While small caps had previously led the stock-market rally, it’s normal for them to begin to lag as bull markets mature, Sarhan said, but it could point toward further overall weakness.”
“Now that they’re rolling over and lagging, that could be a canary in the coal mine that a big top is [potentially] forming in small-cap stocks,” he said. “If it starts forming in the S&P and Dow and Nasdaq, then you can have a more ominous picture develop for the short [and] intermediate term.”
Cantor Fitzgerald on Thursday turned bearish on stocks, with chief market strategist Peter Cecchini citing “divergences” as a factor in the call. Cecchini, who had previously flagged a divergence between price and market breadth, also noted a divergence between equity volatility and high-yield credit as well as the gap in performance between small caps and large-cap stocks.
Cechhini also worried about a “disconcerting disconnect” between slumping emerging markets, which are responding to expectations for higher interest rates, and declining inflationary expectations in the U.S.
”Divergences are like stress fractures, at some point the divergence reverts,” Cecchini said.
Source: http://www.marketwatch.com/story/why-this-stock-selloff-has-everyone-talking-about-divergence-2014-09-25

Adam Sarhan IBTimes Quote: BlackBerry Ltd Passport Unveiled: 'Why Would Anyone Buy A Blackberry Device?'

IB TIMESWednesday 9.24.14
BlackBerry Ltd. shares rose over 2 percent on Wednesday morning after the struggling designer, manufacturer and wireless solutions company unveiled its Passport smartphone at simultaneous global events in London, Toronto and Dubai on Sept. 24. The BlackBerry Passport, which has the size and shape of an actual passport, will include features such as a 4.5-inch square screen and a three-row keyboard. The U.S. price tag: $599.

“BlackBerry needs to answer one simple question: Why would anyone buy a BlackBerry device? That’s it,” Adam Sarhan, founder and chief executive officer of Sarhan Capital, said to IBTimes. “They need an elevator pitch to give to the world. Both consumers and businesses need a catalyst.”
BlackBerry also unveiled the new Porsche Design P’9983 smartphone at London’s famed Harrods department store on Tuesday, combining the Porsche Design brand with the experience of BlackBerry 10 technology. Before the end of the year, the company said the BlackBerry Passport will be available through its carrier and/or distributor partners in more than 30 countries. 
“Unless this Passport has some kind of magical feature, then they have a really tall mountain to climb back toward the top,” Sarhan said.
This will be John Chen’s first global launch at BlackBerry since he took over as CEO in November 2013. But the questions he’ll have to answer are legion.
“Back in the early 2000s and up until 2008, you had a very clear reason why to buy BlackBerry, because no other phone at the time gave you instant access to your email. That was a clear added value,” Sarhan said. “Now there’s just ambiguity. Why BlackBerry?”
Security and Acquisitions
Chen’s dealmaking strategy indicates it knows it needs to be about more than just the phones. At a security summit in July at the Museum of Arts and Design in Manhattan, Blackberry announced it had entered into an agreement to acquire Secusmart GmbH, a high-security voice and data encryption and anti-eavesdropping solutions company for government organizations, enterprises and telecommunications service providers in Germany and internationally. Secusmart offers security across an enterprise system for not only governments but also businesses.
“The acquisitions are very important,” Sarhan said. “BlackBerry has tried to form a little bit of a niche in security,” Sarhan said.
Another acquisition that has caught analysts’ attention is Movirtu, a provider of virtual identity solutions for mobile operators that allows multiple numbers to be active on a single device. BlackBerry announced the deal in September to appeal to business users who want to use one phone, as well as one data trove, for both personal and company use, via Movirtu’s SIM card technology.
“Movirtu seems like a smart play for BlackBerry,” James H. Gellert, Chairman and CEO at Rapid Ratings International, said. “It’s a recognition of BlackBerry’s challenges as a device company and the fact that consumers have shown they don’t want to carry two devices.”
BlackBerry announced another major partnership in June with Amazon for mobile apps on BlackBerry 10.3 scheduled to come out this fall that will add more than 240,000 Android apps. The Amazon Appstore will be preloaded with the BlackBerry 10.3 app and available through a maintenance release for all existing BlackBerry 10 devices.
“BlackBerry seems to be surviving right now,” Keith Bliss, senior vice president and director of sales and marketing at Cuttone & Co., said to IBTimes from the floor of the New York Stock Exchange. “We tend to look at our own little world, and all we see are iPhones and Android devices. But BlackBerry is a global enterprise.”
Bliss said Chen has most likely ceded control of the retail market to tech giants such as Apple Inc., Samsung Electronics and other Android smartphone suppliers because that market is “so ingrained into retail consumers.” Analysts argue that BlackBerry is trying to go back to its enterprise customer because traditionally the business customer was their main bread and butter while the consumer was more of an iPhone or Galaxy user.
“BlackBerry still has a lot of services and businesses both on the phone side and as well as the enterprise-software side for governments around the globe,” Bliss said. “They’re still the preeminent player when it comes to data security across those networks. That’s really what’s kept them in survival mode right now.” 
Second-Quarter Earnings Outlook
BlackBerry is scheduled to report fiscal 2015 second-quarter earnings at 8 a.m. EST Friday, and Wall Street expects the company to post a quarterly loss of $92.68 million, or 16 cents per share excluding items, on revenue of $953.89 million, according to analysts polled by Thomson Reuters. During the same period a year earlier, the company issued an adjusted net income loss of $248 million, or 47 cents per share, on revenue of $1.57 million.
“In the aftermath of Passport’s launch and recent acquisitions, we’ll see whether the company’s attempts at regaining enterprise market share can actually pay off,” Gellert said. “The company’s upcoming earnings reports, both this quarter and over the next few after some key planned rollouts, will offer important hints about whether its recent strategy is gaining any traction.”
Rapid Ratings International measures the financial health of companies, and BlackBerry has been declining since 2012. The firm scored BlackBerry’s financial health at 15, or “very high risk,” on a zero to 100 scale for the fiscal first quarter. The score considers a wide variety of profitability measures, such as gross profitability, earnings and others relative to revenues and several balance sheet items.
“The company may continue to play catch-up in the devices arena, but success in software and services may be BlackBerry’s only hope,” Gellert added.
BlackBerry, which has a market capitalization of $5.57 billion, surprised investors and beat expectations in the previous first quarter after the company reported a loss of $23 million, or 11 cents a share excluding items, better than the expected loss of 26 cents. Revenue for the first quarter of fiscal 2015 was $966 million. 
Shares of BlackBerry rose 2.37 percent to $10.81 on Wednesday following the company’s Passport announcement.
Source: http://www.ibtimes.com/blackberry-ltd-passport-unveiled-why-would-anyone-buy-blackberry-device-1694269

Volume Doesn't Matter & Here's Why

Earlier today I received a great question from a FindLeadingStocks.com Member that inspired this article:

What Is Volume?
When you think about it – that really is a great question. First, lets begin by defining volume. Volume simply is the total number of shares traded in one period (minute, hour, day, week,  month, etc) Remember there are two sides to every trade. Every tick is comprised of a buyer exchanges shares with a seller. So there must be a minimum of two shares for every trade. 
 
Why Is Volume Important?
Institutional investors (a.k.a very large investors who dominate the market) buy and sell millions of shares every day. These investors are important because when a large group of institutions begin buying the same stock- the stock almost always goes up. The same is true when a large group of institutions dump a stock (it almost always goes down). Technical analysis 101 tells us that all things equal- it is healthy to see volume expand with the broader trend and contract on retracements. Or, put another way, in up markets it is healthy to see volume expand when the market rallies and contract when it declines. The opposite is true in down markets. 
 
Volume Is Often Misunderstood:
The problem with most conventional wisdom is that most people believe it and it does not always work (most people fail to beat the S&P 500 each year). In fact, my research shows, there is no viable correlation between volume and strong moves in the market or leading stocks. Don’t believe me? Take a look at the chart below. 
 
Let The Facts Speak For Themselves:
The stock market has soared over the past 5.5 years and volume has steadily declined. How is that possible?. Take a look at the annual chart of the S&P 500 over the past 5.5 years. We are in one of the strongest bull markets in history and volume has steadily contracted. The same is true for countless leading stocks.
 
So What Determines Price? 
At the end of the day volume does not determine price. The number of  buyers vs the number of sellers determines price. For example, if there are very little sellers, a market (or a stock) can easily shoot up irrespective of overall volume. The converse is also true in a down market. So the next time someone tells  you that volume matters- they clearly have not done their homework or simply do not know what they are talking about. I’m sure this will stir the pot and I welcome someone to prove me wrong.

S&P 500 (SPX) Annual Chart:

SPX- Annual Chart

5 Bullish Setups From FindLeadingStocks.com

It’s that time of week again, in this week’s FindLeadingStocks.com report there are 19 new bullish setups. 

Here are 5 bullish setups for your review:

Positions in AET, GOOGL, GPRO

 

Go Pro Inc (GPRO)
GPRO

 

Baker Hughes (BHI)
BHI

Aetna Inc (AET)

AET

Kite Pharma, Inc (KITE)
KITE 

 

Google Inc (GOOGL) 

GOOGL-
 

Looking For Advanced (a.k.a Early) Entry AND Exit Points in Leading Stocks? 

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Adam Sarhan Reuters Quote: Wall St Week Ahead-Dollar's rally bad news for oil, multinationals

ReutersFri, Sep 19 2014
By Akane Otani
NEW YORK, Sept 19 (Reuters) – The asset with the greatest prowess of late has been the U.S. dollar, and if its rally continues, it threatens to eat into the earnings of multinational companies.
The greenback’s recent gains have lifted the dollar index – a measure of the dollar’s value relative to six currencies – for 10 consecutive weeks.
That marks the dollar’s longest rally since the index was created in 1973 – and could pose significant headwinds to dollar-sensitive sectors of the market, particularly companies that respond to commodity prices affected by the greenback, and multinationals that do much of their business overseas.
“For the past few years, the U.S. dollar has been trading in a relatively quiet trading range. This summer, something changed. We are now seeing a new uptrend develop,” said Adam Sarhan, founder and CEO of Sarhan Capital in New York.
Analysts have already pointed fingers at the dollar for the decline in prices of commodities like precious metals, corn and oil in recent weeks.
U.S. multinationals with large streams of revenue from overseas also stand to lose.
“If you’re a consumer products company that does a lot of business overseas, it’s not going to help you. If you’re a large tech company and you do a lot of business overseas, that’s not going to help you,” said Larry Glazer, managing partner at Mayflower Advisors in Boston.
“If you look at Exxon, as well, they’re clearly very diversified but affected by the consequences of currencies.”
Shares of Exxon Mobil have lost 5 percent over the last 10 weeks even as the broader market hit repeated new highs. About 36 percent of Exxon’s revenue comes from the United States, the rest from overseas.
Yet dollar-driven losses in some parts of the market may be offset by gains in others, especially retail. Lower oil prices favor the consumer, who can pocket the savings or spend the cash in stores.
“The stronger dollar benefits U.S. consumers because they are the lion’s share of the economy, and any time you get a tailwind for consumers, it’s good for the U.S. economy, at least in the short run,” Glazer said.
Much of the calculus of whether the dollar’s rise will become a net negative for U.S. stocks depends on domestic inflation rates, as well as the speed and scale of the currency’s gains, market watchers said.
“The euro zone is fragile … the British pound is also weak, and geopolitical or economic woes remain a threat. As long as it is a healthy and normal advance, they should be able to adjust and prepare for it,” Sarhan said.
“But if the move is very large, fast or erratic, those consequences be immeasurable.” (Reporting By Akane Otani; Editing by Nick Zieminski)
Source: http://www.reuters.com/article/2014/09/19/usa-stocks-weekahead-idUSL1N0RK1W120140919

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