Perspective In The Face Of Volatility

By Martin Tillier,  April 11, 2014, 09:51:57 AM EDT

As yesterday’s events unfolded there were plenty people saying that they predicted it. In a way we all did. I, for one, wrote a piece in January saying that some areas of the market were bubbly and would pop at some point. Let’s face it, you didn’t have to be a genius to see that, but that article also dealt with the problem faced by traders and investors even as they understood that valuations were getting a bit rich.

What I pointed out was that, while a correction was certainly coming, the bubbly sectors could continue to rise for a while before that happened. In fact it has only been just over three months, but if we take the iShares Nasdaq Biotech ETF (IBB) as a guide, you can see that the problem is the age old one for comedians and those that follow markets alike... timing.

If you had read only the opening paragraph of that January article and shorted IBB or a tech ETF at that time in the expectation of a bursting bubble, you would almost certainly have been stopped out by now. Even if you weren’t, you probably still wouldn’t be showing a profit after a collapse that began in early March.

The point is that even a drop that feels disastrous while it is taking place can look different with a little perspective. These are worrying times for investors who remember the events of 2008-9, or probably more relevantly, of 2000-01, but when looked at in perspective and with a longer term view, this can easily be seen as an opportunity. If we look over the last 10 years a big collapse has happened just once, while corrections of around 4-8% have happened dozens of times. That doesn’t mean we shouldn’t be aware of the possibility of a big drop, it just means that the odds point more to the opportunity scenario.

If we apply that same longer term view (by way of a 200 day moving average) to a 1 year chart of the S&P 500 it becomes fairly obvious that it is not quite time to panic.

I have said before that I am not a fan of complex technical analysis as I believe that often it becomes about showing you how smart the analyst is rather than telling you something useful, but an average of 200 days of the market close is about as simple as it gets. As you can see, in every period of volatility over the last year that simple trend line has provided an approximate level of support. Should this sell-off continue in the broad market, then we will be butting up against that level at around 1800 on the S&P.
At that point I would be a buyer with a wary eye on a sustained break below the average. I am not talking about just touching, or even trading through, the exact average, but rather, if we close below it for a couple of days I would see it as more possible that the drop could continue. At that point I would take a small loss on my new holdings, but from an even longer term view it would just be another period of volatility to ride out.

This in itself becomes easier if we apply some other news from yesterday morning to give some perspective on our current fears. Yesterday, it was announced that the auction of Greek government 5 year debt was hugely oversubscribed and would yield 4.95%. Only a few short years ago, Greece was the problem that, if we believed the constant news coverage, was about to bring down the global financial system. They were a country teetering on bankruptcy and an example to us all of the evils of profligacy... the bond vigilantes weren’t happy. Now, those same bond traders are falling over themselves to lend Greece money at 4.95% for five years.

Part of the problem this time around is that the traditional indicators of long term problems are still unreliable. US Treasuries showed signs of returning to being market-driven, but the recent more dovish comments coming from the Fed could well be responsible for the lower yields we are seeing, rather than any sense of impending doom among those who control the world’s wealth. Similarly, gold has its own dynamic following years of deleveraging and is also responding to the Fed’s words at least as much as to fundamentals. Oil prices have actually risen over the last couple of days which would indicate that traders there are not expecting any kind of economic meltdown.

When signals are mixed and confusing like this, the best things we can do are to look at history and play the odds. The chart tells us that this is most likely to be another correction to around the level of the 200 day moving average, while our memory of the events in Greece should serve as a good reminder that this too shall pass. I am all for staying alert and reacting to news, but stepping back for a little perspective is a good idea before we push the panic button.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

Read more: http://www.nasdaq.com/article/perspective-in-the-face-of-volatility-cm343590#ixzz2yiP3MhwP

Can't Pay Your Taxes on Time? Here's What To Do

By Money Crashers, 
April 11, 2014,
09:01:09 AM EDT

Tax season is almost over, and though you surely do not enjoy going through the process of filing, it's nothing more than a minor inconvenience if you are poised to receive a nice tax refund check. However, if you owe a hefty tax bill and money is running tight, you could be feeling a sense of dread, wondering what you should do if you can't afford to pay on time.

If you run into this problem, it's important that you handle it properly - otherwise, you could find yourself in major trouble with the IRS. Here are five steps you should take:

1. File Your Return

If your tax return is complete and you owe money you can't pay, you still need to submit your return. Failing to file a return on time can result in penalties and additional fees, which just makes a bad situation worse.

If you can't file your return on time, simply file for an extension. You can do so electronically by using tax preparation software, or by completing Form 4868 and mailing it to the IRS. This extends the deadline for filing to October 15, 2014. However, be aware that just because you get an extension to file, it doesn't mean you're off the hook for payment.

2. Pay What You Can

Paying at least a portion of the amount due can certainly benefit you, as it reduces the interest that will accrue on the unpaid balance. You may even choose to pay your taxes with a credit card to avoid paying penalties and interest to the government. For every month your taxes go unpaid (if you file your return on time), the IRS assesses a 0.5% penalty on the unpaid amount not to exceed 25%. However, if you pay with a credit card offering a 0% introductory APR for 18 months, you could divide your tax bill into 18 equal payments to stretch out the amount owed over the life of the promotional period.

3. Apply for a Payment Installment Agreement

To spread out payments to the IRS without using a credit card, you must apply for a payment installment agreement. To qualify for that agreement, the amount you owe - including all taxes, interest, and penalties - must be less than $50,000.

If you owe more than that, you might still be able to use the installment agreement; however, you'll need to complete Form 9465, the Installment Agreement Request, and Form 433F, the Collection Information Statement. Fees for doing so, which range from $43 to $120, depend upon your income and the type of payment agreement you choose (payroll deduction or direct debit).

4. Contact the IRS

You should find out rather quickly whether your application for an installment agreement is accepted. However, if for some reason it is rejected, contact the IRS directly at 1-800-829-1040. There may be other options for you to take advantage of, such as an offer in compromise, which is when the IRS agrees to lower the payment due.

Of course, this won't save you from paying money up front, as there is a non-refundable application fee of $186. You can find out more information on an offer in compromise by downloading Form 656-B. And even if this doesn't work for you, the IRS may be able to consult you regarding other available options.

5. Start Planning Now for Next Year

It is important that you take preventative measures and attempt to reduce your tax burden so you won't have any similar troubles in the future. For instance, you can adjust your federal income tax withholding allowances, and set up a budget for your tax bill well in advance of the payment due date. Adjust your withholdings by filling out a new W-4 (check with your employer's payroll department for the form), and begin diverting funds each month into a savings account so that you'll have enough funds available at tax time.

Before you consider an installment agreement or any of the other repayment programs, review your options to see if you can drum up the cash to pay off your tax bill on time. Can you sell assets? Do you have any friends or family members who would offer you a loan? If so, you may find that it's much easier dealing with someone you know, rather than owing money to the Federal Government.

Have you ever paid your taxes late?
How did you remedy the situation?

Kenneth Day resides in South Carolina and writes about money management, taxes, and small business accounting.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

Read more: http://www.nasdaq.com/article/cant-pay-your-taxes-on-time-heres-what-to-do-cm343540#ixzz2yhtCLyQH

Stocks suffer big weekly loss; Nasdaq below 4,000

Today 5:00 PM ET (MarketWatch)

By MarketWatch

MARKETWATCH FRONT PAGE

U.S. stocks drop again after the prior session's sharp selloff, weighed down by a disappointing earnings report from J.P. Morgan Chase. 

(See full story: http://www.marketwatch.com/story/us-stocks-extend-fall-sp-set-for-2-weekly-drop-2014-04-11.)

How to spot credit-card skimmers

If wires are sticking out of the ATM, you should probably swipe elsewhere. 

(See full story: http://www.marketwatch.com/story/how-to-spot-credit-card-skimmers-2014-04-11.)

Staples aims to bring 3-D printing to the masses

Staples and 3D Systems have outfitted a Staples store on New York City's Fifth Avenue with a $65,000 printer aimed at serving small businesses. Two other, cheaper printers are for sale. customers, millions of which it said it already does business with. 

(See full story: http://www.marketwatch.com/story/staples-aims-to-bring-3-d-printing-to-the-masses-2014-04-11.)

J.P. Morgan's earnings miss is a win for Main Street

J.P. Morgan's earnings miss demonstrates that the money culture is coming back into balance, writes Tim Mullaney. 

(See full story: http://www.marketwatch.com/story/jp-morgans-earnings-miss-is-great-for-main-street-2014-04-11.)

IBM mainframe, tech's 'dinosaur,' turns 50

The IBM mainframe, the drab-looking refrigerator-size machine that was once the symbol of computer technology, turned 50 this week.

(See full story: http://www.marketwatch.com/story/ibm-mainframe-techs-dinosaur-turns-50-2014-04-11.)

MARKETWATCH PERSONAL FINANCE

What buyers and sellers should know about that 6% commission.

(See full story: http://www.marketwatch.com/story/10-things-your-real-estate-agent-wont-tell-you-2014-03-28.)
-MarketWatch; 415-439-6400; AskNewswires@dowjones.com

(END) Dow Jones Newswires
April 11, 2014 17:00 ET (21:00 GMT)
Copyright (c) 2014 Dow Jones & Company, Inc.

Market Wrap For April 11: Markets Pick Up Exactly Where They Left Off

Today 4:49 PM ET (Benzinga)

U.S. stocks declined sharply for the second day in a row as investors found little reason to reverse Thursday's bullish activity.
Right off the bat, JPMorgan reported disappointing quarterly results which led to a decline in the S&P 500 index. The Volatility Index, also known as the "fear index" rose 6.7 percent to 16.96.

The Nasdaq index continued to see heavy selling in biotech and Internet stocks. As a result, the index closed below the 4,000 mark for the first time since February.

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• The Dow lost 0.89 percent, closing at 16,026.75.
• The S&P 500 lost 0.95 percent, closing at 1,815.69.
• The Nasdaq lost 1.34 percent, closing at 3,999.73.
• Gold lost 0.18 percent, trading at $1,318.10 an ounce.
• Oil gained 0.11 percent, trading at $103.51 a barrel.
• Silver lost 0.63 percent, trading at $19.97 an ounce.

News of Note

Producer Price Index rose 0.5 percent, ahead of the 0.1 percent gain expected.

Core PPI rose 0.6 percent, ahead of the 0.2 percent gain expected.

April Reuters/UofM Consumer Sentiment rose to 82.6 from 80.0. Economists were expecting a reading of 81.0.

Kathleen Sebelius, Secretary of the U.S. Health & Human Services will resign after publicly admitting several months ago she should be held accountable for the challenging launch of Obamacare.

Chinese Consumer Price Index rose to 2.4 percent year over year in March from 2.0 percent in February.

German inflation fell to 1.0 percent year over year in March from 1.2 percent in February.
Japan's government approved a plan to reinstate nuclear energy as a key source of energy for the country.

Analyst Upgrades and Downgrades of Note
Analysts at Bank of America maintained an Underperform rating on ConocoPhillips (NYSE: COP) with a price target raised to $75 from a previous $70. Shares gained 1.66 percent, closing at $70.87.

Analysts at FBR Capital downgraded Ellie Mae (NYSE: ELLI) to Market Perform from Outperform with a price target lowered to $29 from a previous $37. Shares lost 5.40 percent, closing at $24.00.

Analysts at Deutsche Bank upgraded Ford Motor (NYSE: F) to Buy from Hold with a price target raised to $19 from a previous $18.50. Shares finished the day unchanged at $15.63.
Analysts at Bank of America maintained an Underperform rating on Family Dollar Stores (NYSE: FDO) with a price target lowered to $53 from a previous $75. 

Taking the opposite side, analysts at Credit Suisse maintained an Outperform rating on Family Dollar with a price target lowered to $67 from a previous $75. Shares lost 1.89 percent, closing at $56.09.

Analysts at UBS downgraded Corning (NYSE: GLW) to Neutral from Buy. Shares lost 1.83 percent, closing at $20.39.

Analysts at Janney Capital downgraded The Gabp (NYSE: GPS) to Neutral from Buy with a price target lowered to $41 from a previous $50. Meanwhile, analysts at Bank of America maintained a Neutral rating on The Gap with a price target lowered to $43 from a previous $45. Shares lost 2.27 percent, closing at $38.40.

Analysts at Sterne Agee upgraded Imperva (NASDAQ: IMPV) to Buy from Neutral with a $35 price target. Shares gained 0.46 percent, closing at $28.13.

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Analysts at Stifel Nicolaus maintained a Buy rating on Intel (NASDAQ: INTC) with a price target raised to $30 from a previous $28. Shares lost 0.96 percent, closing at $26.17.

Analysts at Keefe Bruyette & Woods upgraded KB Home (NYSE: KBH) to Market Perform from Underperform. Shares lost 1.61 percent, closing at $16.52.

Analysts at Bank of America maintained a Neutral rating on PVH Corp (NYSE: PVH) with a price target raised to $125 from a previous $120. Shares lost 1.60 percent, closing at $121.71.

Analysts at Credit Suisse maintained an Outperform rating on Rite Aid (NYSE: RAD) with a price target raised to $8.50 from a previous $7. Also, analysts at Imperial Capital maintained an Outperform rating on Rite Aid with a price target raised to $8 from a previous $6.50. Shares gained 1.44 percent, closing at $7.04.

Analysts at Mizuho Securities upgraded Toyota Motor (NYSE: TM) to Buy from Neutral. Shares gained 1.48 percent, closing at $104.92.

Analysts at Morgan Stanley upgraded Zynga (NASDAQ: ZNGA) to Equal-weight from Underweight. Shares finished the day unchanged at $4.07.

Equities-Specific News of Note

Cisco (NASDAQ: CSCO) and Juniper Networks (NASDAQ: JNPR) confirmed that the Heartbleed security flaw has been detected in their products including servers, firewalls and routers. Shares of Cisco lost 0.79 percent, closing at $22.47 while shares of Juniper Networks lost 2.21 percent, closing at $24.30.
Chinese based AutoNavi (NASDAQ: AMAP) has agreed to Alibaba's previous offer of acquiring the 72 percent of the company it didn't already own for $21 a share. Shares of AutoNovi gained 2.99 percent, closing at $20.65.

Analysts at Bank of America said that its possible that SanDisk (NASDAQ: SNDK) could miss both its first quarter and second quarter estimates due to demand and pricing concerns. The company reports its first quarter results on April 16. Shares lost 2.70 percent, closing at $73.65.

IAC/InterActive (NASDAQ: IACI) has paid $500 million to buy an additional ten percent of Tinder, a mobile dating app. Shares lost 0.66 percent, closing at $68.82.

3D Systems (NYSE: DDD) expanded its partnership with Canon to include its entire ProJet professional printer line as well as its CubeX desktop printer and its Geomagic 3D object design software. Shares lost 1.50 percent, closing at $48.05.

Huntington Ingalls (NYSE: HII) will partner with Kinder Morgan Partners (NYSE: KMP) to explore developing its Avondale shipyard in Louisiana. Shares of Huntington Ingalls lost 1.23 percent, closing at $98.19 while shares of Kinder Morgan gained 1.08 percent, closing at $77.59.

Tesla (NASDAQ: TSLA) announced it will begin building a network of local charging stations in Beijing, Shanghai and several other large cities before the fall. Shares lost 0.16 percent, closing at $203.87.

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General Motors (NYSE: GM) announced that it has sold 919,114 vehicles in China, regaining the top spot among foreign car makers in the country. Shares lost 4.13 percent, closing at $31.92.

Anheuser-Busch InBev (NYSE: BUD) has acquired Chinese based Siping Ginsberg Draft Beer Co. for an undisclosed amount. Shares gained 0.13 percent, closing at $105.67.

Statoil (NYSE: STO) announced that it discovered up to 75 million barrels of oil and gas in its Valemon Nord prospect in the North Sea. This brings the estimated total recoverable resources at around 206 million barrels of energy. Shares lost 0.20 percent, closing at $27.80.

Sina (NASDAQ: SINA) announced it has approved a $500 million share buyback program. Shares lost 1.35 percent, closing at $52.46.

Winners of Note

Ametek (NYSE: AME) has agreed to acquire Zygo Corp (NASDAQ: ZIGO) for $19.25 per share. Zygo is a high precision optical device manufacturer while Ametek is an electronics manufacturer. The merger is expected to close by the end of the second quarter. Shares of Zygo surged to new 52 week highs of $19.65 before closing the day at $19.43, up 32.36 percent. Shares of Ametek gained 1.25 percent, closing at $50.32.

After pricing its IPO at $15, shares of Zoe's Kitchen (NYSE: ZOES) traded for the first time at $25.65 and traded as high as $26.14 before closing the day at $24.72, up 64.80 percent.

Decliners of Note

Voxeljet (NASDAQ: VJET) plans to sell only three million shares (down from four million) at a price of $15.00, representing a discount of around 19 percent from Thursday's closing prices. The 3D printing system manufacturer plans to use the net proceeds of $41.4 million to use for research and development, sales and marketing and an expansion of its on-demand parts service center as well as beginning construction of a new facility. Shares plunged to new 52 week lows of $15.01 before closing the day at $15.06, down 18.81 percent.

Yingli Green Energy (NYSE: YGE) announced late Thursday night that its first quarter shipments could come in lower by more than 30 percent due to weaker demand in China and a project delay in Algeria. The company did reaffirm its full-year guidance of shipping 4 gigawatts to 4.2 gigawatts for the full fiscal year. Shares lost 6.51 percent, closing at $3.88.

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NQ Mobile (NYSE: NQ) reported its fourth quarter results on Thursday as the company reported an EPS of $0.22, missing the consensus estimate of $0.23. Revenue of $67.9 million beat the consensus estimate of $62.83 million. The company issued a strong guidance and sees its first quarter revenue coming in a range of $75 million to $76 million, above the consensus estimate of $65.5 million. Full year fiscal 2014 revenue is guided to be in a range of $320 million to $325 million, above the consensus estimate of $293.9 million. 

Despite a strong guidance, investors were clearly worried over the company's disclosure that it had identified an accounting overstatement relating to share based compensation expense during its third quarter 2013 results. The company claimed that the error is due to a calculation error. Shares lost 20.58 percent, closing at $12.70.

Earnings of Note

This morning, JPMorgan Chase (NYSE: JPM) reported its first quarter results. The company announced an EPS of $1.28, missing the consensus estimate of $1.39. Revenue of $23.86 billion missed the consensus estimate of $24.55 billion. Net income for the quarter fell to $5.3 billion from $6.5 billion in the same quarter last year as the company blamed its top and bottom line misses on “industry-wide headwinds in Market and Mortgage.” Consumer & Community Banking revenue fell ten percent year over year to $10.5 billion as mortgage business is lower by 68 percent from last year. The bank did announce it will increase its dividends to $0.40 per share and $400 million worth of shares were bought back by the company in the quarter with a $6.5 billion authorization plan in tact until the first quarter of 2015. Shares lost 3.66 percent, closing at $55.30.

This morning, Wells Fargo (NYSE: WFC) reported its first quarter results. The company announced an EPS of $1.05, beating the consensus estimate of $0.97. Revenue of $20.6 billion was in-line with the consensus estimate. Net income in the quarter rose to $5.9 billion from $5.2 billion in the same quarter last year as the bank saw strong gains in its loan and deposit division and a continued improvement in credit quality. The bank noted that it had strengthen its Common Equity Tier 1 ratio at 11.36 percent as of March 31. In the quarter the company approved an additional 350 million shares in its authority to repurchase back its stock. Shares lost 0.78 percent, closing at $48.08.

Quote of the Day

High cash, low leverage bull markets don't end this way. We think bigger 10-15% correction more likely in autumn as Fed QE ends and rate-hike expectations grow. - Bank of America's chief investment strategist Michael Hartnett in a note to investors on Thursday.

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