Fast Food, McDonald’s (MCD), and Fast Profits

We’ve got new highs, ladies and bohunks, on all the major indexes. It’s a certified breakout, and considering the charts we’re about to show you, it’s also setting up to be one wham-doggy, slap’o’the porpoise affair. This is a chart of where Main Street is currently situated vis-à-vis the stock market. And as you can see, there’s not a whole lot of enthusiasm for equities these days. Despite the Dow, S&P 500 and NASDAQ posting new all-time highs this week, the American Association of Individual Investors has now declined for ten of the last twelve weekly readings and is fast approaching six year lows. Given the contrarian nature of this indicator, it is not conceivable that a market top is in place or that one is even remotely close. Individual investors are, as a group, among the worst market timers in the game. They consistently vote, as a group, to sell at bottoms and buy at tops. The latest AAII reading must be understood in this context. Extreme pessimistic readings are a green light to load up – not sell. Next Up: Corporate Cash, Where is it Heading? Our next chart (below) shows that against Main Street’s myopia, corporate America’s vision…

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Oil falls to five-year low, China exports slow, McDonald’s (MCD) same-store sales sink and Alipay platform (BABA) jumps in usage

Markets opened lower on Monday morning after oil dipped to a five-year low. The price for a barrel of oil dropped more than $2 per barrel to $66.77. Pricing this low has not been recorded since October of 2009. This drop followed the recent meeting where OPEC decided they would not be cutting oil production despite the dropping price. There was also a report released on Friday by Morgan Stanley, which said that they predict oil prices could hit $43 per barrel next year. Adam Longson, an analyst with Morgan Stanley, said, “Without OPEC intervention, markets risk becoming unbalanced with peak oversupply likely in the second quarter of 2015.” Concerns of global growth were mounting after China announced a less than stellar economic report. China announced that exports rose 4.7% and imports fell 6.7% in November. This left the country with a trade surplus of $54.5 billion. Economists were expecting exports to grow 8.2%, imports to rise 3.9% and hold a trade surplus of $43.5 billion. Andy Ji, a senior currency strategist with Commonwealth Bank of Australia, said, “Despite another record surplus, the details paint a grim picture with slower export growth and a contraction in commodity imports in volume terms.”…

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U.S. Postal Service data breach, McDonalds (MCD) sales down and General Motors (GM) ordered parts two months before recall

Markets were heading slightly higher on Monday after the United States Postal Service announced that there was a data breach the affected it’s employees and their call center. They reported that nearly 800,000 employees have had their personal information compromised along with customer’s data that called into the call center from January through August of this year. The information that was compromised from employees could include things such as Social Security numbers, birth dates, addresses and more. David Partenherimer, the spokesman for USPS, said that they start alerting employees on Monday morning and they would be covering a year of credit monitoring for it’s employees. He also said, “The intrusion is limited in scope and all operations of the Postal Service are functioning normally.” The FBI is leading the investigation. Shares of McDonald’s Corp. (MCD) were relatively flat after the company announced that worldwide sales at their established restaurants were down in October. The company partially attributed the drop from stiffer competition and their supplier scandal in Japan and China. Sales at stores open at least 13 months were down 0.5%. This did, however, beat out analysts’ expectations of a 2.2% drop. When focusing just on the U.S. same-store sales…

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Bull Market = Gold Misery (MCD, FB, GDX, GLD)

We’re not sure if it was an early practical joke – if someone over at Barron’s got November 1st confused with April 1st – but we sure got a kick out of it. Well, it seems that precisely as last week’s drop in gold was occurring – preceded, of course, by the requisite drop in the stocks of gold miners – none other than that above-mentioned august repository of knowledge on investments was offering its readers the following fare: Exploring Gold Miners… The benefits of investing in precious-metal producers You betcha. Barron’s decided (with assistance from the stock aficionados at Morningstar) that it might be time to diversify your portfolio with a gold mining ETF, which – get this! – “has an R-squared (a measure of performance correlation) of just 4 with the MSCI All Country World Index.” Just 4?! Can you believe it? They further wrote that “…if a much-talked about global slowdown turns into a recession and the global stock markets tank, that exposure to the miners might start looking good, along with bullion…. [Gold mining] stocks look fairly inexpensive to Morningstar’s equity analyst team right now.” Oh, Lordy… The ETF they were referring to, of course, was…

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TransFat Profits (MCD, XLU, GLD, FXI)

Wanted to make a quick update of two separate markets before we moved on to this week’s analysis and trade recommendations. We’ll start with the Chinese market. Stocks in Shanghai have moved into a bullish technical posture the likes of which we haven’t seen since the spring of 2008. It’s early going yet, so things could reverse in a jif, but we’ve a hunch that stocks in that bastion of commie central planning are about to lift off. And that’s certainly good news for us freedom-loving angels here in the good old U.S. of A. Here’s a chart of Chinese market proxy iShares China Large-Cap ETF (NYSE:FXI) for the last six-months. Pay close attention to the moving average configuration on the far right. The move from $32 to $42 over the last half year was in itself monumental, and the trend channel that defines the rise shows that price is currently sitting directly in the middle of that track – neither too hot nor too cold (in red, far right). Indeed, the latest RSI and MACD reads (in black) offer the same assessment, which is, that today we have no worries about an ‘overbought’ market situation in Shanghai. But where…

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Markets up after U.S. military strikes in Iraq, McDonalds (MCD) feeling affects of China food scare and General Motors (GM) announces third recall

Markets were headed higher on Friday after it was announced that the United States bombed Islamic State positions on Iraq. It was announced that U.S. warplanes struck Iraq for the first time since American forces left the country in 2011. President Obama gave approval on relief supplies and air strikes overnight. This news comes shortly after President Obama said that we must act to prevent potential genocide of minorities. Shares of McDonald’s Corp (MCD) were down slightly after the company announced that they were not sure if they would reach their 2014 sales growth for the year after the recent food scare in China. The company had to quickly find new suppliers so that they would still be able to produce their Chicken McNuggets and Big Macs after a TV report in China showed factory workers using expired meat products and tampering with production dates. Customers have also been turning elsewhere for their fast food meals once the report aired. Mark Kalinowski, an analyst with Janney Capital Markets, said that this warning could potentially cause the first full year of global sales declines at the restaurant since 2002. McDonalds announced on Monday that sales in both China and Japan were…

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Visa (V) drops revenue forecast, Starbucks (SBUX) up on sales increase and McDonald’s (MCD) changes menu in Hong Kong on food scandal

Markets were falling slightly after news was released that Visa (V) had cut their revenue forecasts for the year. The company reported that their expectations for the year were slashed due to cross-border growth transactions slowing down as the U.S. dollar strengthened. Visa retains over 60% of its transaction volume outside of the United States. The company said growth forecast for the year were now sitting between 9% and 10%. This was down from the previous projections between 10% and 11%. In the latest quarter, Visa’s revenue was up less than a percent to $854 million. Gil Luria, an analyst with Wedbush Securities Inc., said, “Service revenue and processing revenue growth was adequate. It’s more the international revenue, the cross border transaction, that took a step down this quarter.” Shares of Starbucks (SBUX) were on the rise after the company announced an increase in sales for the latest quarter. They are partially attributing the rise in sales to there most recently revamped breakfast sandwiches and other new food menu items. Starbucks CEO, Howard Schultz, said, “Food at Starbucks, I think we can all admit, for many, many years was a weakness and a challenge for us.” The coffee giant announced they…

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