3 Stocks Likely to Dip in December

nvestors shouldn't wait until year's end to sell stocks for tax purposes, but most will do so anyway this year. That might result in further punishment for the three year-to-date decliners listed below.

It's a bad idea to procrastinate on tax-loss selling because studies show that, for stocks that perform poorly from January through November, December returns tend to be lousy. For the same stocks, returns during the following January tend to be good. This "January Effect" is particularly strong among shares of relatively small companies.
How do I know investors will nonetheless wait until December to sell losers? Two things tell me. First, the January Effect wouldn't exist if they didn't. Studies comparing possible causes point to tax-loss selling as the likeliest one. Dogs get sold in December by investors seeking to capture tax write-offs, and rebound in January when the selling subsides. My second clue is something called loss aversion, which helps explain procrastination among tax-loss sellers. Behavioral finance studies show that investors feel the pain of losses more than they joy of gains. That's why they dump winners quickly (before gains turn to losses) while clutching losers to the bitter end (to resist admitting to losses), just the opposite of what the statistics on share-price momentum say they should do.
All of this means that year-to-date stock losers are likely (but not certain) to underperform in December, especially among small companies. The three stocks listed below are S&P SmallCap 600 members with year-to-date price declines in the double digits; the index has returned 16% year-to-date. I looked for some other less-than-promising signs. These companies fell short of Wall Street's earnings forecasts last quarter, which bodes poorly for coming quarters (based purely on statistics, not company-specific analysis). Also, current-quarter earnings consensuses for these companies are based on widely scattered individual estimates. In financial nerdspeak, each consensus has a standard deviation of estimates that's high relative to the mean. That can signal analyst indecision. Studies have shown that widely scattered forecasts often (not always) predict earnings misses.

Atlantic Tele-Network

Atlantic Tele-Network (ATNI: 36.33, -0.88, -2.36%) provides telecom services to under-reached areas in North America and the Caribbean, including broadband in rural upstate New York, wire-line phone service in Guyana and cellular service in the Turks and Caicos Islands. That business can be plenty profitable. In recent years the company has turned more than 30 cents of each sales dollar into operating profit. Over the past four quarters, however, that figure has slipped to 12 cents, and in three of the past four quarters, earnings have missed estimates by more than half. Earlier this year, Atlantic agreed to buy wireless spectrum licenses and other assets for rural markets in Georgia, South Carolina and a handful of other states from Verizon (VZ: 32.21, -0.14, -0.43%) for $223 million. (Verizon acquired the assets with its purchase of Alltel last year.) Atlantic is experiencing greater-than-average costs while it puts the new assets to work, analysts say. Shareholders have doubled their money over the past five years, not counting dividends, which currently provide a yield of 2.4%, but the stock price has fallen by more than 30% year-to-date.

La-Z-Boy

La-Z-Boy (LZB: 7.62, +0.02, +0.26%) last posted sales of more than $2 billion during its fiscal year ended April 2005. This year's sales are expected to fall just short of $1.2 billion. The good news is that, after a string of losses brought on by the popping of America's house-price bubble and a corresponding drop in demand for home furnishings, La-Z-Boy is forecast to post its second consecutive annual profit during its current fiscal year ending April 24. The bad news is that earnings per share were 43% lower than expected last quarter. A production shift to Mexico hasn't paid off with as much cost savings as hoped; a marketing campaign featuring Brooke Shields is costing plenty; and prices for many commodities, including furniture materials, are soaring. Shares, down more than 20% this year, at least seem inexpensive relative to forecast sales and profits.

Skechers

Toning sneakers might have jumped the shark (video). Analysts point out that Shape-Ups, meant to give even casual wearers a subtle workout, are no longer immune to discounting, and that Skechers USA (SKX: 22.68, -0.38, -1.64%), which sells them, has some excess inventory to work off. In its latest quarterly results announcement, Skechers said demand remains strong but that some customers over-ordered for the back-to-school season, leading to some order cancellations, and that inventory will be sold "at reasonable margins over the next six months or so." Earnings fell 28% short of expectations for the quarter. Three months ago, analysts were looking for 2010 earnings of $3.81 a share. Now, they say $2.92 a share. The stock has lost more than 20% of its value this year.


Read more: 3 Stocks Likely to Dip in December - Investing - Stocks - SmartMoney.com http://www.smartmoney.com/investing/stocks/3-stocks-likely-to-dip-in-december/#ixzz16PvMVuLb

3 Stocks Likely to Dip in December

nvestors shouldn't wait until year's end to sell stocks for tax purposes, but most will do so anyway this year. That might result in further punishment for the three year-to-date decliners listed below.

It's a bad idea to procrastinate on tax-loss selling because studies show that, for stocks that perform poorly from January through November, December returns tend to be lousy. For the same stocks, returns during the following January tend to be good. This "January Effect" is particularly strong among shares of relatively small companies.
How do I know investors will nonetheless wait until December to sell losers? Two things tell me. First, the January Effect wouldn't exist if they didn't. Studies comparing possible causes point to tax-loss selling as the likeliest one. Dogs get sold in December by investors seeking to capture tax write-offs, and rebound in January when the selling subsides. My second clue is something called loss aversion, which helps explain procrastination among tax-loss sellers. Behavioral finance studies show that investors feel the pain of losses more than they joy of gains. That's why they dump winners quickly (before gains turn to losses) while clutching losers to the bitter end (to resist admitting to losses), just the opposite of what the statistics on share-price momentum say they should do.
All of this means that year-to-date stock losers are likely (but not certain) to underperform in December, especially among small companies. The three stocks listed below are S&P SmallCap 600 members with year-to-date price declines in the double digits; the index has returned 16% year-to-date. I looked for some other less-than-promising signs. These companies fell short of Wall Street's earnings forecasts last quarter, which bodes poorly for coming quarters (based purely on statistics, not company-specific analysis). Also, current-quarter earnings consensuses for these companies are based on widely scattered individual estimates. In financial nerdspeak, each consensus has a standard deviation of estimates that's high relative to the mean. That can signal analyst indecision. Studies have shown that widely scattered forecasts often (not always) predict earnings misses.

Atlantic Tele-Network

Atlantic Tele-Network (ATNI: 36.33, -0.88, -2.36%) provides telecom services to under-reached areas in North America and the Caribbean, including broadband in rural upstate New York, wire-line phone service in Guyana and cellular service in the Turks and Caicos Islands. That business can be plenty profitable. In recent years the company has turned more than 30 cents of each sales dollar into operating profit. Over the past four quarters, however, that figure has slipped to 12 cents, and in three of the past four quarters, earnings have missed estimates by more than half. Earlier this year, Atlantic agreed to buy wireless spectrum licenses and other assets for rural markets in Georgia, South Carolina and a handful of other states from Verizon (VZ: 32.21, -0.14, -0.43%) for $223 million. (Verizon acquired the assets with its purchase of Alltel last year.) Atlantic is experiencing greater-than-average costs while it puts the new assets to work, analysts say. Shareholders have doubled their money over the past five years, not counting dividends, which currently provide a yield of 2.4%, but the stock price has fallen by more than 30% year-to-date.

La-Z-Boy

La-Z-Boy (LZB: 7.62, +0.02, +0.26%) last posted sales of more than $2 billion during its fiscal year ended April 2005. This year's sales are expected to fall just short of $1.2 billion. The good news is that, after a string of losses brought on by the popping of America's house-price bubble and a corresponding drop in demand for home furnishings, La-Z-Boy is forecast to post its second consecutive annual profit during its current fiscal year ending April 24. The bad news is that earnings per share were 43% lower than expected last quarter. A production shift to Mexico hasn't paid off with as much cost savings as hoped; a marketing campaign featuring Brooke Shields is costing plenty; and prices for many commodities, including furniture materials, are soaring. Shares, down more than 20% this year, at least seem inexpensive relative to forecast sales and profits.

Skechers

Toning sneakers might have jumped the shark (video). Analysts point out that Shape-Ups, meant to give even casual wearers a subtle workout, are no longer immune to discounting, and that Skechers USA (SKX: 22.68, -0.38, -1.64%), which sells them, has some excess inventory to work off. In its latest quarterly results announcement, Skechers said demand remains strong but that some customers over-ordered for the back-to-school season, leading to some order cancellations, and that inventory will be sold "at reasonable margins over the next six months or so." Earnings fell 28% short of expectations for the quarter. Three months ago, analysts were looking for 2010 earnings of $3.81 a share. Now, they say $2.92 a share. The stock has lost more than 20% of its value this year.


Read more: 3 Stocks Likely to Dip in December - Investing - Stocks - SmartMoney.com http://www.smartmoney.com/investing/stocks/3-stocks-likely-to-dip-in-december/#ixzz16PvMVuLb

Important notice: Microsoft Money Plus is no longer available for purchase. All purchased Money Plus products must be activated prior to Jan. 31, 2011. Online services extensions are no longer available for Money Plus.

Important notice: Microsoft Money Plus is no longer available for purchase. All purchased Money Plus products must be activated prior to Jan. 31, 2011. Online services extensions are no longer available for Money Plus. With banks, brokerage firms and Web sites now providing a range of options for managing personal finances, the consumer need for Microsoft Money Plus has changed. After suspending annual updates of Money Plus in 2008, Microsoft ended sales of Money Plus on June 30, 2009. We would like to thank the many dedicated users who have been enthusiastic supporters of Microsoft Money over the years, as well as our partner financial institutions who helped pioneer a digital vision of financial management. Microsoft remains committed to helping customers chart a course to financial well-being. The MSN Money Web site will continue to provide personal finance information and advice plus comprehensive market news and quotes. We will continue to evolve and enhance the online MSN offering in the coming months. Update (9/01/10): Online Banking Services Changing in October Beginning October 1, 2010, Microsoft Money will disable online banking services for all accounts that use a third party provider. Microsoft Money will continue supporting services with direct connections to a financial institution until online services are discontinued on January 31, 2011. Please see the following KB article for more information on how to identify accounts that may be disabled and instructions on how to proceed: http://support.microsoft.com/kb/2390720 Update (6/17/10): Microsoft has released 'Sunset' versions of Money Plus Deluxe and Money Plus Home & Business that do not require online activation. This version will allow you to keep your Money files and transactional history (on current and future machines) but will not allow access to online services or premium services. Full details and links to the Download Center can be found here. Update (7/15/10): Online Help to be discontinued The online Help for Money Plus (and some older versions of Money) will no longer be available after July 2010. Microsoft has provided a downloadable version of the help file. To learn more about how to use the alternate help content, check out the support article here, and get the downloadable help content here. Current Money Plus customers who have questions or concerns can find additional information here. Additional Content

Double Bottom Forming on the GBP/CHF

Price action on the GBP/CHF has been wild to say the least recently. The trading has certainly been erratic from a pricing perspective, and we believe that this volatility is set to continue. However, over the past few months, if you've been following the 4 Hourly charts, there seems to have been a double bottom pattern forming which is relatively strong.
The first spike low of the double bottom comes in at 1.5365. This is the candle low of a single four hourly bar. Following this bar, the currency pair put in a solid performance and rallied all the way up to 1.6000 – a strong psychological level.
However, since reaching that level last week, the GBP/CHF has sold off once more, to the point where it is now approaching the low once again. Could this be a double bottom forming in action? We believe that given the strengths of both the GBP and the CHF, there is a high likelihood that indeed the currency will once again reverse and head higher.
There are a number of things which are pointing towards this being the likely outcome. Firstly, the %R indicator, which is almost always a reliable oscillator to use on this currency pair – is oversold. This indicates that the currency pair could indeed be in for a correction in the near term. However, whilst this is certainly a convincing factor, it is definitely not the only thing which is leading us to believe that a trend reversal is about to occur.
Over the past 2 years, double bottoms have formed on almost every currency pair out there. They are simply a fact of technical analysis and they are a very reliable measurement of future price action.
However, if you look at double bottoms from a statistical perspective, you will see that if you had been trading the double bottoms which formed on the GBP/CHF currency pair, you would have had the most success. That's right – when it comes to double bottom chart set ups, the GBP/CHF is definitely the most accurate currency pair to base your trades off.
So – where are we targeting for this currency pair trade in the near future? We believe that in the short term, a bounce up to 1.5700 could definitely be on the cards. If this point is reached, we believe that – depending on momentum – the price could return all the way to the 1.600 high that was set last week, and potentially surpass this also.
To curb risk, we have placed a stop loss order below the first spike low at 1.5320 – which should provide enough space to allow for any "false" breakouts to occur, without it affecting our double bottom prediction.

Euro Sovereign Debt is Still Attractive

Earlier this year, if you asked anyone whether or not they would actively and happily hold on to Eurozone sovereign debt for the long run, the answer would probably have been a laugh and a strong "no". Having just been through a moderate sovereign debt crisis in countries such as Greece and Spain (and these issues are of course continuing) – it would be fairly naïve to predict that people would be overly happy to hold Euro sovereign debt for the long term – right?
Wrong. Apparently, Eurozone debt is just as attractive as it has ever been, only that now investors are being hugely rewarded for holding it. Credit default swap spreads have widened over the past few months to levels similar to those when the debt crises started for these countries, but there is a significant difference this time around.
The difference is that investors do not fear a default by any of the countries involved! In fact, a recent survey of investors found that sovereign debt trading is actually more reliable than currency trading in the current market environment.
This is a big turnaround from January and February of this year. In fact, the turnaround in attitude is almost inconceivable.
So what about the ratings agencies? Don't they have a say in all of this? Yes – of course they do, and their reaction to the whole situation has simply been to downgrade Eurozone sovereign debt over and over again. But investors are slightly cleverer than to simply take the credit rating agencies for their word. They know that whilst a credit rating for an individual country might be bad, the Eurozone is not just comprised of a single country.
Indeed, as we saw in the case of the Greece situation, Germany played a huge – and arguably dutiful – role in rescuing the country. If the Germans hadn't have come to the party, the entire Eurozone would have felt the fallout of the debt crisis.
Therefore, it would appear that whilst the German support for Greece (and Spain) has come and gone, investors believe that the country will still be there to provide financial support for any other Eurozone members who inadvertently fall in to trouble in the coming months. If Greece was able to get a multi-billion EUR bailout, there is absolutely no reason why a similar package couldn't be given to other Eurozone countries.
And therein lays the reason why Eurozone debt is attractive. Whilst not written on paper, Germany has a pact with all member countries that it will not allow them to default. The German insurance policy therefore allows investors to profit from amazing interest rates in some Eurozone member nations, whilst being supported by the main player – Germany – should anything go wrong along the line.

Japanese Yen Waivers on Rumours of Further Intervention

The Japanese Yen was trading significantly lower at the end of last week, as rumours surfaced of further intervention in the USD/JPY currency pair at the end of the week. It was speculated that the Japanese Foreign Ministry was delving in to the currency markets, apparently continuing the intervention that we have seen over the last few weeks.
Whether it is true or not, the rumour itself certainly had a tangible effect on the market, and the Yen was sent lower to close the week approximately unchanged from the open on Monday.
Our belief is that indeed the Foreign Ministry did push a few buttons and attempt to buy the USD throughout the end of the week, albeit in smaller amounts than the past. You will all remember not too many weeks ago when the Japanese central bank came to the party and bought a huge number of USD – which sent the USD/JPY skyrocketing around 300 pips or so.
The same movement seems to have taken place in the EUR/JPY currency pair also. The Yen traded at 112.95 at the end of the week versus the EUR, which was down almost 100 pips from the starting level at the beginning of the week – at 113.75.
Regardless of whether the Japanese Foreign Ministry did intervene or not, it is certainly clear from this recent fall that investors are nervous as to the future of the currency.
The large gains that the Yen has made over the past few months seem to be coming to an end, and the momentum is definitely dying out. However, it is unclear as yet whether or not the definite low has been reached in the USD/JPY pair. As we always say – the market has its own mind, so it wouldn't be at all surprising if having just said that, the market returns to form a new low in the next month or so. If this happens however, it could be rather short lived.
What is clear in this situation however is that the Japanese Foreign Ministry is keeping a close eye on the currency markets, and will no doubt trade more Yen and USD's should the need arise.