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1. Barron's Commercial Real Estate Article
By Christopher Grey
1:04 a.m. EDT
article this weekend on commercial real estate is right on the money in my opinion. It identifies the key bear concerns, which include falling cash flow and lingering balance sheet issues, and bull arguments, which include successful equity raises and flight to quality by investors to the largest and strongest REITs that will survive and grow through this downturn.
Overall, I think the
iShares Dow Jones Real Estate Index
is stuck in a trading range as the bears and bulls battle it out for a while. I have been playing this successfully with short-term trades in
ProShares Ultra Real Estate
, buying on weakness in the low 3's and selling on strength in the high 3's. I prefer URE as a trading vehicle because of its price relative to its option value, which I believe is favorable. I think IYR and URE will have difficulty significantly breaking out of this range to the upside or downside unless there is major change in the macro environment.
2. Restaurant Sector Weakening Rapidly
By Alan Farley
7:54 a.m. EDT
Restaurant stocks have been on fire in the last month, but it looks like the rally is coming to an end. A wave of selling pressure hit the group last week, after poorly received
has also been rolling lower since it posted relatively strong first quarter earnings on April 22.
is my top choice if you're looking for a pullback play in the restaurant sector, once the group stabilizes from recent weakness. The stock broke out above eight-month resistance on April 22 and has now pulled back into the breakout gap. The fill level is right around $29. This should support the stock and trigger a bounce back to the high. My target for the continuing uptrend is in the upper $30s.
More technical comments on the stock and annotated chart
3. Monster Move in China
By Scott Rothbort
10:09 a.m. EDT
The Chinese markets, both Hong Kong and Shanghai, had huge moves overnight. China, it appears, is going to lead the world out of the global recession. That country did it with far less stimulus than the U.S. China got a better bang for the yuan, so to speak, as that country's stimulus was targeted with more precision than the U.S. spendulus or porkulus, whatever it was.
I have long held
and added the
FTSE/Xinhua China 25 Index
ETF several weeks at various levels in the belief that China would be the first to emerge from the global economic doldrums.
Long stock: LFC, CHL, FXI
4. Look for Laggards If You Are Nervous
By Brian Gilmartin
1:42 p.m. EDT
The 903 level for the
was the Dec. 31, 2008, close (but I don't know if that is remotely critical from a technical perspective), and yet we just took out the 875-877, January '09-February '09 highs for the S&P 500, so I am nervous about buying here. Still, one way we are trying to be prudent about putting cash to work is to look for those stocks or sectors that are lagging.
Utilities are lagging (great call by Howard Simons), but we've added a smidge to accounts, given their 4%-5% weight within the S&P 500. Telecom, too, another 4%-5% weighting in the S&P 500, and I thought the earnings reports for both
were decent. Nothing negative of note was disclosed.
Some of the staples are lagging as well, such as
Johnson & Johnson
Procter & Gamble
. As long as the dollar doesn't strengthen dramatically and your time horizon is longer than the next two weeks, we've been sniffing around these names.
I thought Jim Cramer was pretty critical of PG's report and of the management last week. We covered the call, and the ability to pass through a 7% price increase was indicative of the power of that premium brand. I didn't like the volume decline of 5%, but the stock reacted very little to the bad news. We are not long PG currently, but that is another one I'm looking at, given how the stock has traded relative to the 5% organic volume decline. Like the utes, PG is still trading above its 50-day moving average.
long SPY, index funds, KO, T, VZ, JNJ, XLU
5. The Coal Thesis Took a While To Work...But It's Working
By Dan Fitzpatrick
2:02 p.m. EDT
Jim, remember that
we did back in February when I was at your offices? The thesis has taken a while to work through the market, but it does seem to be working.
In that video, you mentioned that
would make sense if we start shipping coal overseas, and that's what's happening now.
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This article was written by a staff member of RealMoney.com.