GARY TALKS IPOS

In the pre-market, I want to talk about this King Digital. It was a $23 IPO and we questioned the IPO here for you, just like we questioned Groupon and Zynga. We questioned Facebook at $40 and watched it go down to $15 before finally kicking in gear. King Digital comes out and as we simply told you, a large humongous percentage of their business was this Candy Crush, and it does not take a rocket scientist to know that all of these games go in and out of fashion. It seems to me that they brought this King Digital public at the peak of the Candy Crush phenomena and things were already heading south just about the time they were going public. They have a couple other games in the hopper but to repeat something like a Candy Crush, no way Jose. So, it was a $23 deal that never got above $23.50, the stock was down $4.25 to $14 and let me be clear, this thing is probably going to single digits if not more. The bottom line is simple; things are heading south, games only last so long. Candy Crush will not be around forever even though my family is insane with it.

So, that is the Candy Crush story. Again, it is very important that you recognize that there has been a ton IPOs that came public in the next couple years. Here is the good news, a bunch of them are going to go up threefold, fivefold, tenfold and there maybe one or two of them that go up twenty fold if not re. Here is the bad news. There is going to be a ton of them that go to zero. So, please pay attention, especially to those bio-techs that have been brought public when they should not be brought public. They have zero sales. I have told you on this show that when I was in the penny stock business we brought out things public at five cents a share that had more revenues then some of this crap that is being foisted upon you, the investing public, by these wonderful and fabulous investment banking companies that almost brought down the system a few years ago. They are repeating what they did in 1999. Know that you have somewhat of a hottish type market so they just bring anything out that breathes because they know you guys are going to go after it.
What is the message? Read the fine print. Check the stuff out. Remember that during a bull phase you can get away with some things. During a bear phase, the curtains come down. Any company that is losing money is going to get clipped big time. Any company with no sales, see you! 90% to the downside. This is not me being opinionated. This is me telling you we have studied all the bear markets out there and the same thing happens every time. The investment banks go into their bunkers, hear no evil see no evil speak no evil, while you guys lose a ton of money. Of course the regulators say nothing because when they come out with the IPOs they are not saying to buy or sell, but that we are just bringing it out. They don’t care if you lose 100% of your money.They never have and they never will. Back in 1999 they slapped .com on companies’ names just because they knew the stock would go up because of it. Some mutual funds did that too. And of course when the .com went out of fashion, they just took .com off the mutual funds’ names or the companies’ names. Welcome to the marketing machine that we call Wall Street.

But, guess what? It is your job to do the leg work. It is your job to understand that a company with no sales should not have a five billion dollar market cap. If you don’t understand that, get out. That is the best message I can send you guys as I am watching some of this nonsense go on. I found about 15 companies with no sales brought public in the last six months. That is just a cursory look. 15! No sales! Open up a lemonade stand on your corner, sell the first glass of lemonade, you will have more sales than these companies that are actually in the public domain. Way to be Mr. Investment bankers.

GARY ON THE KATE SPADE EARNINGS DEBACLE!

Most of you probably haven’t heard of Kate Spade, but they are apparel and accessories. It’s Liz Claiborne, Juicy Couture and Lucky Brand. I have been watching the stock for a while. Why? Because it is trading up near the tips, the tips near the highs. We waited to see what earnings will do. So, the stock closed yesterday at $38.87. And then they reported, and the numbers looked pretty darn good. It opened up at $40.83 from $38.87, two bucks. By ten o’clock it was $42.86 up a nice 11%. And it constituted at that time what I consider to be a decent breakaway gap out of range. Well…it finished down $9.87 to $29 on 52 million shares. Its average daily volume is only 1.5 million. It traded half the float on the sell down. So, what happened? ‘Gary, you like buying high volume breakouts off of good numbers on earnings. Why not Kate Spade?’ Well, this is a very good question. This takes me into my little lesson.

Kate Spade had not had their conference call. We are very careful about not getting in front of conference calls. Kate Spade handled the whole earnings horribly. They came out with earnings and had other material information that would have affected the stock negatively and held off until the stock was already opened. People were making money, people were excited and then oops, guidance is not so good. If I am an investor in Kate Spade and I got my you know what kicked in, I am suing them. This is a lawsuit. I am not a litigious guy, but this is a lawsuit. Withholding material information, especially negative information, while the stock is trading up on supposed good news, would be shirking their fiduciary responsibility of full and fair disclosure. But, the lesson in all of this is simplistic. Wait for the conference call because you never know if what they will say will affect the things that go on with the stock and it turns right back around. And, by the way, that goes for the upside too.

AND THIS GUY DOES NOTHING BUT DEFEND THE PREZ!

SOURCE: http://www.washingtonpost.com/opinions/dana-milbank-obama-vacations-as-the-world-burns/2014/08/11/58755e5e-21a5-11e4-86ca-6f03cbd15c1a_story.html

GARY TALKS NIFTY FIFTY ON RADIO!

In case you did not know, many moons ago there was something called the Nifty Fifty. It kind of, sort of, got lost in the shuffle as to why it was called the Nifty Fifty. Many people have this idea that at the end of some big bull market everything was sold off except for approximately fifty stocks. They kept going up while the market went down, and then they finally cracked and that was the end of the market. But, that is really not the case. What happened was, I think it was the late sixties or early seventies, there were just 50 consistent growth type names that would just consistently move higher and higher and they were named the Nifty Fifty. If I recall right, American Home Products was in there and the drug companies and Walmart was in there. I think Walmart was the best gainer, but the words Nifty Fifty ended up with this thought process as being very negative. That is where I want to bring them up.

Again, we are not here to predict anything in the markets. We don’t know what we are eating for dinner tonight. We gave out recently a list of leading stocks and they are starting to emerge pretty well here, even though the market has been pretty crappy here, except for Friday. I will explain that to you here in a minute. I am going to use the term Nifty Fiftyish, in that here is what we have to be watching out for right now. So, listen carefully. We have had another minor league correction. The Russell 2000 dropped 10% and other indices have dropped 5%. Now, for sure, many other stocks have dropped a lot more than that. But, I also have discussed with you how fewer and fewer stocks are working, leading the market to be narrower and narrower. All I just want to let you know is that continues. On Friday the market found the low. Today, the Dow was only up 16 but the market was much better. I am just letting you know that when I do my scans, there are so many fewer stocks participating than three weeks ago, six weeks ago, ten weeks ago, sixteen weeks ago, six months ago, or nine months ago. Typically, eventually ever narrowing markets will lead into a bigger correction of consequence. That is what we want to let you know. That is about it. We are rallying up and every time we rally up it is narrower.

We don’t know at what point, if ever, we are going to crack into some real bearish market. We are just letting you know, it remains narrower and narrower by my estimates. So, the worst areas have been Europe. The German DAX has been literally crushed. That found some relative strength on Friday and had a big day yesterday following what we did Friday. But, I am letting you know we are going to give you out the leading stocks, best areas to avoid. Just letting you know that fewer and fewer and narrower and narrower and this must be watched. Because if we ever go into a real bearish phase, and remember the last time they stopped printing money we dropped 22%. The time before that we dropped 17% and that is on most indices. If we are ever going to do that again, this is how it happens. Now we have discussed for months now all of these characteristics, I don’t even need that right now. I am more interested in price action now and again the Dow held the 200 day moving average, one of the worst areas. The Russell 2000 finally starting to rally some, but very weak. The Nasdaq 100 only got down to the 50 day-moving-average and held pretty well and remember, it is just 100 names. This is narrower. We just wanted to give you a little bit of definition, letting you know what we are watching. I think all that happened over the last couple of days is that markets don’t go straight down and it was getting a little icky. Now, the job right now is very simple, to ferret out whether we can have a meaningful rally, a sustainable rally and not a bounce and a trash. My guess is that we are not going to break last week’s lows right now and we will reevaluate on a day-to-day basis. While I said to you that the market is much better than the Dow only up 16 today, there were some flaws today still. But, I do want you to know that when the Dow is up 16 but advance/declines on the New York are 22 to 8 and on the Nasdaq 19 to 7, that is good news. I am hoping to see much more of that. Now we are through earnings’ season, there are a bunch more earnings to come out but really the crux of the important names are out. We are going to get a bunch of important retailers soon, some energy stocks too, but the big Kahunas are mostly done.

WHEN YOU THINK YOU ARE HAVING A ROUGH DAY, THINK OF THESE PEOPLE!

SOURCE: http://www.dailymail.co.uk/news/article-2721686/Now-U-S-sending-weapons-Kurdish-forces-Obama-steps-offensive-against-ISIS.html

GARY ON THE PRESIDENT TAKING VICTORY LAPS ON THE ECONOMY!

We  guess when a lot of things are going wrong, a President must hang their hat on something good. Surprisingly, President Obama chose the economy in the past week. Really? Didn’t we just have a -2.9% GDP quarter/ But of course, that was only weather. To be fair, the economy is better. The economy is improving. Finally, there may be some traction. But let’s get some facts to the forefront here…just the facts. Since the President became President, he has overseen:

$7 TRILLION IN ADDED DEBT. This is far and away a record for that amount of time. Of course, this coming after promising to cut the debt in half. This comes after the 2nd worst President with our tax dollars, George W. Bush.

A CRASH IN THE EMPLOYMENT PARTICIPATION RATE. Add half of this fake list back in and you get an unemployment rate around 9%. We are still waiting for this list from the Labor Department.

MASSIVE YEARLY DEFICITS. After single-handedly raising the yearly deficit to over $1 trillion, the President is patting himself on the back that it is down to $600 billion.

A HUGE INCREASE IN FOOD STAMPS AND OTHER WELFARE-type payments. In fact, the government lowered the restrictions and actually advertises for people to get on welfare.

A MANIACAL FEDERAL RESERVE that not only keeps rates down at 0% but also printed trillions to fund the deficits at lower rates.

FEDERAL SPENDING that doubles the last year of Clinton’s presidency. If you want only one stat on why this economy cannot reach its full potential, it is that the government now spends between $3-4 trillion each year…which comes out of the real economy.

Higher taxes…massive regulations…giveaways to buddies(green energy)…takeaways from enemies(coal companies). Have you seen the stock charts of the coal companies?

We can go on and on…one can talk GDP all they want…a good quarter, a bad quarter. The bottom line is that longer term, this country is being saddled with debt that will be very hard to come back from. We pray that the markets don’t wake up one day and shoot the middle finger at all this debt and deficits as well as anti-business policies.