Which Order To Use? Stop-Loss Or Stop-Limit Orders

Hot Biotech Stocks To Invest In Right Now

Traders and investors who seek to limit potential losses can use several types of orders that can get them into and out of the market at times when they may not be able to place an order manually. Stop-loss and stop-limit orders are two such order types that can accomplish this. But it is critical to understand the difference.

Stop Loss Orders

There are two types of stop-loss orders:

1) Sell-stop orders protect long positions by triggering a market sell order if the price falls below a certain level. The underlying assumption behind this strategy is that if the price falls this far, it may continue to fall much further, so the loss is capped by selling at this price.

Example:

Frank owns 1,000 shares of ABC stock. He purchased the stock at $30 a share, and it has risen to $45 on rumors of a potential buyout. He wants to lock in a gain of at least $10 per share, so he places a sell-stop order at $41. If the stock drops back below this price, then the order will become a market order and get filled at the current market price, which may be more (or more likely less) than the stop-loss price of $41. In this case, Frank might get $41 for 500 shares and $40.50 for the rest. But he will get to keep most of his gain.

2) Buy-stop orders are conceptually the same as sell stops except that they are used to protect short positions. A buy-stop order price will be above the current market price and will trigger if the price rises above that level.

Stop-Limit Orders

These orders are similar to stop-loss orders, but as their name states, there is a limit on the price at which they will execute. There are two prices specified in a stop-limit order; the stop price that will convert the order to a sell order, and the limit price. Instead of the order becoming a market order to sell, the sell order becomes a limit order that will only execute at the limit price or better. Of course, there is no guarantee that this order will be filled, especially if the stock price is rising or falling rapidly. Stop-limit orders are sometimes used because if the price of the stock or other security falls below the limit, then the investor does not want to sell and is willing to wait for the price to rise back to the limit price.

Example:

Frank's ABC stock never drops to the stop-loss price, but it continues to rise and eventually reaches $50 a share. He cancels his stop-loss order at $41 and puts in a stop limit order at $47 with a limit of $45. If the stock price falls below $47, then the order becomes a live sell-limit order. If the stock price falls below $45 before Frank's order is filled, then the order will remain unfilled until the price climbs back to $45.

Many investors will cancel their limit orders if the stock price falls below the limit price, because they placed them solely to limit their loss when the price was dropping. Since they missed their chance to get out, they will then simply wait for the price to go back up and may not wish to sell at that limit price at that point, because the stock may continue to rise. If Frank could not get out at $45 or better and the stock price falls back to $40, then he may be wise to cancel the order, because if it rises back to $45, it may keep going.

As with buy-stop-loss orders, buy-stop-limit orders are used for short sales where the investor is willing to risk waiting for the price to come back down if the purchase is not made at the limit price or better.

Benefits and Risks

Stop-loss and stop-limit orders can provide different types of protection for investors. Stop-loss orders can guarantee execution, but not price. And price slippage frequently occurs upon execution. Most sell-stop orders are filled at a price below the strike price; the amount of difference depends on how fast the price is dropping. An order may get filled for a considerably lower price if the price is plummeting quickly.

Stop-limit orders can guarantee a price limit, but the trade may not be executed. This can saddle the investor with a substantial loss in a fast market, because the limit price may not get filled before the market price drops below that amount. If bad news comes out about a company and the limit price is only $1 or $2 below the stop-loss price, then the investor must hold onto the stock for an indeterminate period before the share price rises again. Both types of orders can be entered as either day or good-until-canceled (GTC) orders.

Choosing which type of order to use essentially boils down to deciding which type of risk is better to take. The first step to using either type of order correctly is to carefully assess how the stock is trading. If the stock is volatile with substantial price movement, then a stop-limit order may be more effective because of its price guarantee. If the trade doesn't execute, then the investor may only have to wait a short time for the price to rise again. A stop-loss order would be appropriate if, for example, bad news comes out about a company that casts doubt upon its long-term future. In this case, the stock price may not return to its current level for months or years, if it ever does, and investors would therefore be wise to cut their losses and take the market price on the sale. A stop-limit order may yield a considerably larger loss if it does not execute.

Another important factor to consider when placing either type of order is where to set the stop and limit prices. Technical analysis can be a useful tool here, and stop-loss prices are often placed at levels of technical support or resistance. Investors who place stop-loss orders on stocks that are steadily climbing should take care to give the stock a little room to fall back, because if they set their stop price too close to the current market price, they may get stopped out due to a relatively small retracement in price. Then they would miss out on the next major surge when the price starts to rise again.

The Bottom Line

Stop-loss and stop-limit orders can provide different types of protection for both long and short investors. Stop-loss orders guarantee execution, while stop-limit orders guarantee price. For more information on these and other types of investment trades, consult your broker or financial advisor.

3 Reasons Twitter's IPO Shouldn't Thrill Average Investors

Top Biotech Companies To Invest In Right Now

Bloomberg via Getty Images Ever since Facebook (FB) went public last year, investors have expected Twitter to follow suit. Last week, would-be Twitter buyers got their wish, as the company announced it was going public. The company's method of making the announcement wasn't all that surprising -- Twitter tweeted it. Yet one key fact marked a big change to the IPO process: Investors didn't get access to the IPO filing that companies have to submit to the SEC to get approval to go public. Instead, Twitter took advantage of new legal provisions allowing it to keep its IPO filing on Form S-1 confidential. This less-public method for launching a public offering came from the Jumpstart Our Business Startups Act. Many of the provisions of the JOBS Act allow would-be public companies to prepare for their IPOs differently from how they have in the past -- differences that have major implications for IPO investors seeking to make informed decisions about whether to buy shares of companies that are coming public. 1. Institutional Investors Will Get a New Edge Ordinary investors already suffer from substantial disadvantages in the IPO process. Many underwriting brokers reserve shares of the most-popular IPOs for their select customers, locking out many small investors entirely. As a result, ordinary investors often have to resort to buying shares on the open market after the initial offering, which can involve paying a big premium to the IPO price. Under the JOBS Act, institutional and other preferred customers will get another advantage. Companies considering an IPO will be able to meet with what the law calls qualified institutional buyers to get a sense of their interest in buying shares. That will give those accredited investors and institutions more potential advance notice of a coming IPO, giving them more time to research and investigate the company before the general public even knows an IPO is coming. 2. Expect More Speculation Based on Fewer Facts High-profile IPOs create a lot of hype, especially when the companies involved are in hot sectors of the market. Now that Facebook has finally recovered from its post-IPO collapse and climbed comfortably above its offering price, social-media stocks are hot again. Twitter couldn't have timed its IPO better to get maximum attention from investors. But, without access to Twitter's SEC filing, the professional analysts, journalists, and other commentators whose job it is to help educate investors about the coming initial public offering will have far fewer hard facts at their disposal. Instead, they'll have to turn to less reliable information about the company and its business prospects, potentially creating misleading impressions about the company that will only be rebutted once the SEC filing is made public. Moreover, they'll have less time to critique and challenge Twitter's filing after the confidentiality period ends. In addition, the quality of information won't be as good even once it becomes public. For instance, the JOBS Act allows companies to go public with just two years of financial data, rather than the three to five years of information previously required. In addition, companies are allowed to offer streamlined disclosures about executive compensation and can use an extended phase-in period to start following guidelines on internal controls. All told, the changes will leave you needing to be even more careful to avoid letting hype affect your judgment. 3. Many Companies Will Use IPO Alternatives to Raise Capital One revolutionary move the JOBS Act made was to remove a ban on advertising offerings of private securities. As long as a company can demonstrate that all of its purchasers qualify as accredited investors -- people with high incomes or net worth, as well as certain institutions -- it can solicit and advertise to such purchasers. Moreover, under what's known as the crowdfunding exemption, companies can solicit investment from non-accredited investors. Companies can raise up to $1 million annually, with limits on the amount that any one person can invest based on income and net worth figures. Although companies using the crowdfunding exemption have to file information with the SEC, it's much less extensive than what a full IPO filing would require. Be Careful Out There The JOBS Act made it a lot easier for companies from Twitter to tiny local businesses to raise capital. But the new rules also come with traps for unwary investors. Only by exercising caution can you avoid investing in problematic businesses and make smart moves with your money.

NGEX Resources Could Be The Next Copper Giant

Introduction

In this article I'll have a closer look at NGEX Resources (NGQRF.PK), a member of the Lunding Group which owns the extremely large Los Helados copper project in Chile, the Josemaria project in Argentina and the Filo del Sol project exactly on the border of Chile and Argentina. As these three properties are within 11 miles from each other, one can easily say NGEX is a potential district play.

I'll look at the Los Helados project and Josemaria project and try to determine a potential take-out price as I don't think NGEX wants to develop the project itself. Thereafter I'll move over to the balance sheet to see if there's a short-term funding risk. This will result in my investment thesis at the end of this article.

As trading is quite illiquid on the US-listing of NGEX Resources, I'd recommend to trade through the facilities of the Toronto Stock Exchange where NGEX is listed on the main board with ticker symbol NGQ.

Executive Summary

I will prove in this article that NGEX Resources is an attractive play to gain exposure to copper and gold, as the company currently has three gigantic projects in the Chilean-Argentinean copper-gold belt and two of them are joint ventured to Pan Pacific Copper, one of the largest Japanese industrial conglomerates.

According to my calculations, Los Helados alone is worth in excess of $400M which is more than the current market capitalization of NGEX Resources. As its joint venture partner has deep pockets, local experience and a lot of technical expertise, I'm expecting Pan Pacific Copper to make an offer to acquire Los Helados as it already operates a large 100,000 tpd copper mine just six miles north of NGEX' project. During the further de-risking process, Pan Pacific Copper could (and will) be a great help for NGEX resources to continue its exploration and permitting efforts.

The upcoming catalysts for Los Helados are an updated resource estimate which is expected any week now and will be the base for a Preliminary Ec! onomic Assessment next year which should prove the viability of the project.

Long story short, NGEX is a de-risked exploration company with a very high possibility to get bought out by its Japanese joint venture partner for approximately $3/share, which is a 65% premium over the current share price.

I currently don't have a position in NGEX yet, but might initiate one in the near future.

Exploration project 1: Los Helados

The Los Helados project was discovered about 5 years ago, and the company has continued drilling on the project ever since.

(click to enlarge)

Los Helados could be one of the most important copper finds of this decade as the project seems to extremely large as the company released drill intercepts including 1,147 meters (yes, meters and not feet) of 0.46% copper equivalent and 1,345 meters (!) of 0.39% copper-equivalent. This continuous drilling resulted in a resource estimate containing almost 19 billion pounds of copper, in excess of 11 million ounces of gold and approximately 95 million ounces of silver.

(click to enlarge)

The average grade is approximately 0.4% copper which is relatively low, but definitely viable as on such large project the economies of scale will be extremely important. A 100,000 tonnes per day production facility would result in an annual output of approximately 270 million pounds of copper per annum, using a 90% recovery rate for the copper. Using a very conservative 60% recovery rate for the gold and silver, Los Helados would also produce 120,000 ounces of gold and 850,000 ounces of silver as by-products which would obviously have a positive impact on the copper cash cost.

It's also extremely important to note NGEX owns 60% of the Los Helados project with the balance owned by Pan Pacific Copper, which is a major integrated copper mining and smelting company that is jointly owned by JX Nippon Mining & Metals Corporation and Mitsui Mining & Smelting Company, two Japanese heavyweights.

I think the partnership with Pan Pacific Copper will be extremely important to NGEX, as PPC already operates a gigantic $3B copper project just six miles north of Los Helados (see image), so PPC knows the region very well and has very probably built excellent relationships with local officials.

(click to enlarge)

As Caserones will produce approximately 225-400 million pounds of copper per year, Pan Pacific Copper definitely knows how to handle large-scale projects. As PPC is familiar with the region and mineralization, I would not be surprised if PPC would make an offer to acquire the Los Helados project a little bit further down the road. In a later paragraph I'll make a calculation how much this project would be worth to NGEX Resources.

Exploration Project 2: Josemaria

NGEX Resources also owns 60% of the Josemaria copper project in Argentina's San Juan province, with again Pan Pacific Copper holding the balance of 40%. The Josemaria project was discovered approximately 10 years ago, and NGEX has since then continued to expand the mineralized zones.

At this moment, the Josemaria project has a resource estimate containing 7.5 billion pounds of copper and 7.5 million ounces of gold at a weighted average grade of 0.35% Cu and 0.24g/t gold or 0.51% copper-equivalent.

The recovery rates at Jos! emaria ar! e decent as well with 85% for copper and almost 70% for the gold which bode very well for future studies to determine the economic viability of the project.

As the mineralized zone seems to be open to the north and the south, I personally expect this project to reach the threshold of 10 billion pounds of copper in the next resource update. The only negative thing is the fact the Josemaria project is located in Argentina, which isn't really a mining-friendly country. It will be an interesting case to see how NGEX and Pan Pacific Copper will be able to move this project forward after Pan American Silver (PAAS) ran into problems with its La Navidad Silver project last year. Fortunately for NGEX Resources, it's not the federal government but the local states who have the prerogative about mining permits and licenses, and the San Juan province is one of the most mining-friendly provinces.

What will be the next catalysts?

NGEX Resources expects to release a resource update on both the Los Helados and the Josemaria project shortly, and I think both projects could now hold in excess of 30 billion pounds of copper.

I expect NGEX to start a PEA study at Los Helados based on this new resource estimate, to run some numbers to get a first indication about the economic viability of the project. I don't think there will be big surprised in the PEA, as one could easily extrapolate the capex and opex (adjusted for inflation) from the Caserones project onto Los Helados as the average grade is approximately the same.

I'm personally expecting NGEX to use a 100,000 tpd base case scenario which should have an average annual output of 270 million pounds of copper, 120,000 ounces of gold and 850,000 ounces of silver. As the infrastructure is quite decent in the region, I would expect a total capex of $3.5B and operating costs of approximately $1.25/lbs of copper after deducting the gold and silver ounces as by-product credits.

A PEA could be ready by H1 2014 whereafter NGEX should move on to! the PFS-! stage if the PEA warrants this. As a large project like this will need a lot of planning and engineering, I don't think we will see any production before 2020.

We also shouldn't expect Pan Pacific Copper to make an offer any day now, as I think PPC's main focus is to get its own project through the commissioning phase. I think the PEA will be the most important catalyst as that will be the first time the both joint venture partners will have some 'hard' numbers to determine the real value of the project.

$3.5B is a lot of money, how will this get financed?

$3.5B is indeed a lot of money, and if we apply a 60/40 debt/equity ratio, the NGEX/PPC joint venture will have to cough up roughly $1.4B in equity to get the project funded.

Fortunately PPC has access to a lot of cash and might be able to provide all the debt and lend NGEX the equity part it needs to get the project built. This might be the most realistic option as Pan Pacific Copper can immediately reinvest the cash flow generated by its own project back in another copper project in Chile.

Another, less likely possibility to raise equity is through selling a part of the precious metals in a streaming deal. I can imagine Sandstorm Gold (SAND) and Silver Wheaton (SLW) would be very interested in a substantial precious metals streaming agreement. At the current gold and silver prices NGEX wouldn't even have to sell its entire precious metals production under a streaming arrangement.

Raising money through issuing new shares is also a possibility, but will likely be the plan of last resort.

My longer-term view

As NGEX has explored and then subsequently sold other mining projects, I think Los Helados and Josemaria will eventually be sold, with Pan Pacific Copper being the logical buyer as it already is a joint venture partner and has sufficient experience in the region. I think PPC will wait for a PEA before zeroing in on Los Helados. In this paragraph I'll make some basic calculations how much the Los Helad! os projec! t could be worth.

In the next columns I'll calculate the value of the different commodities based on different multiples. I will use the net recoverable amount (thus after applying the expected recovery rates) of pounds and ounces (10 billion pounds of copper, 4.1 million ounces of gold and 34 million ounces of silver)

Copper	Value	Gold	Value	Silver	Value
1ct/lbs	100M	$25/oz	102.5M	$0.5/oz	17M
2ct/lbs	200M	$50/oz	205M	$1/oz	34M
3ct/lbs	300M	$75/oz	307.5M	$1.5/oz	51M
4ct/lbs	400M	$100/oz	410M	$2/oz	68M
5ct/lbs	500M

If I use a base case assumption NGEX will be able to attract a price of $0.02/lbs of copper, $50/oz of gold and $1/oz of silver, the Los Helados project carries a value of approximately $440M, which is more than the company's entire market capitalization. If you want to use other values, you can compile your own expected sale price based on the previous table.

Hot Financial Stocks To Own For 2014

It's obvious NGEX Resources is undervalued, as even just its share of the Los Helados project already warrants a higher value than the entire company.

The Balance Sheet

In this paragraph I'll look at the balance sheet to see if NGEX has any short-term funding issues and if the company can continue its exploration work in the foreseeable future.

The company has a working capital of $19.8M and approximately $22M in cash and equivalents, using a 1.04 USD/CAD conversion rate. The company recorded an operating loss of $4.4M in Q2 because its exploration efforts were way down from Q1 (as the winters are the preferred exploration season) when the company recorded a $16.3M operating loss. At the current cash burn rate and expected annual exploration costs, NGEX currently does not have sufficient money to conclude another full winter exploration program, and will likely have to raise cash, possibly on the back of the resource estimate updates.

Investment Thesis

NGEX Resources (partially) owns three projects in an emerging copper district on the Chilean-Argentinean border with substantial resource estimates totaling in excess of 25 billion pounds of copper and almost 20 million ounces of gold.

The company has found an excellent partner in Pan Pacific Copper, which is the joint venture vehicle of two gigantic Japanese conglomera! tes. As P! an Pacific Copper also operates a $3B, 100,000tpd copper project, the company can obviously offer a lot of technical expertise.

As its main Los Helados project is located in Chile, I feel NGEX Resources is a relatively safe play to bet on a further recovery in the copper price with a potential buyout scenario by the Japanese as cherry on the pie. The Argentinean Josemaria project and the Chilean Los Filos project provide additional upside even after the company sells Los Helados.

Source: NGEX Resources Could Be The Next Copper Giant

Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in NGQRF.PK over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. (More...)

Bears Retreating as Europe Shorts Sink to Seven-Year Low

The retreat by European bears is turning into a rout as equity traders reduce bets against the region's stocks by about $80 billion to the lowest level in at least seven years.

Borrowed shares of Euro Stoxx 50 Index (SX5E) companies, an indication of wagers against equities, have fallen to 1.7 percent of the total outstanding from 3.2 percent two years ago and 24 percent at the height of the financial crisis, according to data from Markit, the London-based research firm. Bullish bets on Europe have reached the most since 2007 in a Bank of America Corp. survey of money managers who oversee $518 billion.

Investors are regaining confidence, squeezing pessimists who say the economy remains sluggish outside of Germany and point to record-low trading volume as a lack of conviction in the Euro Stoxx's 61 percent rally of the past two years. Besides gains in stocks from Banco Bilbao Vizcaya Argentaria SA to Renault SA (RNO), yields on Spanish and Italian bonds have declined to a two-year low compared with German bunds and the euro has strengthened 4.6 percent to $1.35 in the past six months.

"It's called the pain of being wrong," Anthony Lawler, who oversees $6 billion invested in hedge funds at GAM Holding AG in London, said in a phone interview on Sept. 19. "You've had some data in Europe which act as an important signal of a possible bottoming. There are still a lot of risks in Europe for sure, but people believe that those risks are less likely to occur than six or 12 months ago."

Fed Stimulus

The Euro Stoxx 50 rose 2.1 percent last week as the Federal Reserve unexpectedly refrained from cutting monetary stimulus. That brought the advance since equity markets bottomed in March 2009 to 62 percent, trailing the 153 percent surge in the Standard & Poor's 500 Index (SPX) and the 99 percent rally in the MSCI Asia-Pacific Index, data compiled by Bloomberg show.

Gains in European equities suggest the economy, while still sluggish, is healing after the resolve of European Central Bank President Mario Draghi and German Chancellor Angela Merkel helped to ease the region's debt crisis and ended the euro area's longest-ever recession. Merkel won a third term in office after her Christian Democratic bloc took 41.5 percent of the vote in yesterday's election. Shares in the euro area are still cheaper than those in the U.S. or Japan compared with projected earnings, Bloomberg data show.

The Euro Stoxx 50 slipped 0.7 percent to 2,906.35 at the close of trading today.

Emergency Aid

Traders had $165 billion of European equities on loan in September 2011, as the region labored under the debt crisis that forced five nations to accept 496 billion euros ($672 billion) in emergency-aid pledges, Markit data show. Borrowing stock is the first step in a short sale, after which speculators sell the securities in the hope of replacing them at a lower price.

Two years later, after Draghi pledged to do whatever is needed to save the euro, the Stoxx Europe 600 Index has climbed 37 percent while loaned shares have fallen 12 percent to $145 billion, indicating more than $80 billion of short positions have been closed or allowed to expire, the data show.

"If shares are going up and short-sellers were skeptical, you would see more borrowing and more betting against that rise," Karl Loomes, a London-based analyst at SunGard Astec Analytics, a securities-lending data and research company, said in a Sept. 20 phone interview. "Given that share prices have risen and borrowing has remained stable or decreased, it does imply there is a lot more optimism in the market."

Short Interest

Markit's data shows the percentage of shares on loan as of Sept. 13 is hovering just above the 1.5 percent reached Aug. 23. That was the lowest ever in data going back seven years and compares with an average of 5.1 percent over that period.

Mutual funds that buy European equities have attracted $13.1 billion in the past six weeks, according to data from Societe Generale SA and EPFR Global Inc., a research company in Cambridge, Massachusetts. That compares with outflows of $4 billion for funds that buy American stocks.

Investors would need to send about $100 billion to European shares to restore the amount withdrawn since 2007, according to estimates from Paris-based Societe Generale based on data through the end of August.

The Euro Stoxx 50 has returned 61 percent including dividends after sliding to a two-year low on Sept. 12, 2011, data compiled by Bloomberg show. Shares rallied as Draghi, who became the head of the ECB in November 2011, pledged to keep interest rates low and euro-area manufacturing returned to growth following a two-year contraction.

'Stopped Deteriorating'

"There are a lot of reasons why you don't want to be underweight Europe," said Robin Thorn, who helps oversee $70 billion as head of equities at PineBridge Investments LLC in New York. "Things have stopped deteriorating. That doesn't mean that things are great, but they have stopped getting worse."

Europe's debt crisis helped keep both bulls and bears out of the market, according to Stuart Jarvis, who helps manage securities lending at Citigroup Inc. in London. An average of $14.9 billion worth of stock has traded daily during 2012 and 2013 in Germany, the U.K. and France, the least ever, according to data compiled by Bloomberg going back to 2004. The number of Euro Stoxx 50 shares changing hands has dropped 18 percent this year to 710 million a day, the data show.

"There has been a lack of allocation to Europe," Jarvis said in a phone interview on Sept. 19. "In order to put money to work, investors needed a greater degree of certainty. People just didn't like the overall environment in Europe, be it the regulatory angle or the macro uncertainty."

Short Bans

Countries from Spain (GSPG10YR) to Belgium and Italy prohibited short selling during market retreats in recent years. While regulators have lifted the restrictions, traders are still required to report positions that exceed preset levels.

The U.S. and Asia are better investments because European economies are expanding too slowly, according to Julian Lewis at Cavendish Asset Management Ltd. Euro-zone unemployment held at a record 12.1 percent in July and European car sales have slipped to the lowest since records began in 1990, signs that the recovery lacks momentum after the bloc exited a record-long recession in the second quarter.

While yields in Spain and Italy have fallen by more than 3 percentage points from their highs to 4.30 percent and 4.29 percent, respectively, they are still at least 24 basis points above the average rate in 2006, before the financial crisis.

The extra yield investors demand to hold the nations' debt over benchmark German bunds has fallen to less than 2.4 percentage points, the lowest in two years, Bloomberg data show. Draghi said on Sept. 16 that the improvement in the euro area isn't fully reflected in the cost of credit.

Little Growth

"Although it looks now as if the euro zone is not going to collapse, we see little signs of growth," Lewis, who helps oversee $800 million in London, said in a phone interview on Sept. 18. "Despite the recovery in Europe, we don't see as much upside there as we see in emerging markets and the U.S."

Europe's economy helps make the ECB's commitment to loose monetary policy more credible for investors, who have been skeptical of pledges of long-term easing from the Fed and the Bank of England, Pierre Lapointe, the Montreal-based head of global strategy and research at Pavilion Global Markets Ltd., wrote in a Sept. 17 report. The key interest rate in the euro area is 0.5 percent, compared with 0-0.25 percent in the U.S. and 0.1 percent in Japan.

"The European Central Bank could step in if needed," said Nicolaas Marais, who helps oversee $327 billion as head of multi-asset investments and portfolio solutions at Schroders Plc in London. "There are some signs of economic stabilization and portfolio rebalancing from the U.S. and emerging markets to Europe. All in all, it's too much for shorts to bet against."

Investor Allocation

ECB support may be helping attract investors. Thirty-six percent of respondents in a survey this month by Charlotte, North Carolina-based Bank of America said they hold more euro-area equities than are represented in global benchmarks, the highest level since May 2007, when the subprime-debt crisis began. A year ago, they reported the smallest allocations to the region relative to the rest of the world, the survey showed.

"In today's prolonged bull market, it has been hard for short sellers to bet against a rising tide," said Will Duff Gordon, the research director at Markit in London. "The muted borrowed demand today is the new reality."

Borrowed stock in BBVA (BBVA), Spain's second-biggest bank, has fallen to 0.23 percent of the Bilbao-based company's outstanding shares, from 2.41 percent two years ago, Markit data show. The stock surged 41 percent in the period.

Renault Borrow

Loans of shares on Paris-based Renault, France's second-largest carmaker, account for 0.92 percent, down from 2.25 percent in 2011 as the shares more than doubled, the data show. Stock on loan in Siemens AG (SIE), Europe's largest engineering company, has declined to 0.78 percent of shares outstanding from 3.2 percent two years ago, Markit data show. Shares of Munich-based Siemens climbed 33 percent in that time.

Euro-region stocks are cheaper than equities in the U.S. and Asia. After an 11 percent gain in 2013, the Euro Stoxx 50 trades at 13.1 times projected earnings, according to Bloomberg data. The S&P 500 is valued at 15.5 times estimated profit and Japan's Topix (TPX) trades at 15.1 times income after Prime Minister Shinzo Abe vowed to end two decades of deflation.

Valuations in Europe will climb over the next 12 to 18 months amid rising appetite for risk, Anna Esposito, an equity strategist at Citigroup in London, wrote in a Sept. 16 report. She forecast that the Stoxx 600 will rise to 370 by the end of 2014, 18 percent above last week's close.

For Julio Sobremazas, the Madrid-based head of global equities at BBVA, the closing of short bets on European shares is a positive sign for the market.

"What you have seen is all those underweight positions, and there were many, being closed and moving to neutral," Sobremazas said in an interview. "We now need to see people committing money."

'Mad Money' Lightning Round: Facebook Can Creep Higher

Search Jim Cramer's "Mad Money" trading recommendations using our exclusive "Mad Money" Stock Screener.

NEW YORK (TheStreet) -- Here's what Jim Cramer had to say about some of the stocks callers offered up during the "Mad Money Lightning Round" Thursday evening:

Facebook (FB): "I think it can go higher. Not at the pace it is now, but it will creep higher."

Newfield Exploration (NFX): "It's not as good as EOG Resources (EOG) or Anadarko Petroleum (APC). Those are better." Statoil (STO): "You buy this one if you want capital preservation. It's not a fast grower, though." InterMune (ITMN): "These are hugely speculative. As long as you realize that, you're OK." LightInTheBox (LITB): "No, we don't want LightInTheBox, we back Jack in the Box (JACK)." Annaly Capital (NLY): "No, I'm saying no to Annaly. We don't know what they own. Avoid it. " To read a full recap of "Mad Money" on CNBC, click here. To sign up for Jim Cramer's free Booyah! newsletter with all of his latest articles and videos please click here. To watch replays of Cramer's video segments, visit the Mad Money page on CNBC. -- Written by Scott Rutt in Washington, D.C. To email Scott about this article, click here: Scott Rutt Follow Scott on Twitter @ScottRutt or get updates on Facebook, ScottRuttDC

Jim Cramer's 6 Stocks in 60 Seconds: ED ARMH PNRA NOK S LULU (Update 1)

Best Insurance Companies To Watch In Right Now

Check out Jim Cramer's latest trading recommendations on "Action Alerts Plus". (Updates from 10:24 a.m. ET with closing information.)

NEW YORK (TheStreet) -- Here's what Jim Cramer had to say on CNBC's "Squawk on the Street" Wednesday.

Goldman Sachs said to buy Consolidated Energy (ED). Cramer said this upgrade, comnig ahead of the Federal Reserve's FOMC announcement, could hint at a small taper. ED rose 3.1% to $56.99.

Everyone seems to think ARM Holdings (ARMH) is the best semiconductor company in the world, according to Cramer, who added that it's also related to Apple (AAPL). ARMH was up 4.6% to $48.29. Wedbush is bullish on Panera Bread Company (PNRA). "I like this call very much," Cramer said. PNRA rose nearly 1% to $172.89. "People love Nokia (NOK) because Microsoft (MSFT) gave them a lot of money," Cramer said. NOK jumped 7% to $6.71. Credit Suisse initiated Sprint (S) as a sell. Cramer added that if the firm wants to go against CEO Dan Hesse, then "be my guest." S was up nearly 1% to $6.44. Canaccord said Lululemon Athletica (LULU) might breakout to the upside, but Cramer said he wants to see who the next CEO will be first. LULU ended the day at $74.46, up 6%. To sign up for Jim Cramer's free Booyah! newsletter, with all of his latest articles and videos, please click here. -- Written by Bret Kenwell in Petoskey, Mich. Follow @BretKenwell

5 Stocks Insiders Love Right Now

DELAFIELD, Wis. (Stockpickr) -- Corporate insiders sell their own companies' stock for a number of reasons.

>>Beat the S&P With These 5 Shareholder Yield Champs

They might need the cash for a big personal purchase such as a new house or yacht, or they might need the cash to fund a charity. Sometimes they sell as part of a planned selling program that they have put in place for diversification purposes, which allows them to sell stock in stages instead of selling all at one price.

Other times they sell because they think their stock is overvalued and the risk/reward is no longer attractive. Some even dump their own stock because they have inside knowledge that a competitor is eating their lunch and stealing market share.

But insiders usually buy their own shares for one reason: They think the stock is a bargain and has tremendous upside.

>>5 Stocks Set to Soar on Bullish Earnings

The key word in that last statement is "think." Just because a corporate insider thinks his or her stock is going to trade higher, that doesn't mean it will play out that way. Insiders can have all the conviction in the world that their stock is a buy, but if the market doesn't agree with them, the stock could end up going nowhere. Also, I say "usually" because sometimes insiders are loaned money by the company to buy their own stock. Those loans are often sweetheart deals and shouldn't be viewed as organic insider buying.

At the end of the day, its large institutional money managers running big mutual funds and hedge funds that drive stock prices, not insiders. That said, many of these savvy stock operators will follow insider buying activity when they agree with the insider that the stock is undervalued and has upside potential. This is why it's so important to always be monitoring insider activity, but it's twice as important to make sure the trend of the stock coincides with the insider buying.

>>5 Stocks Under $10 in Breakout Territory

Recently, a number of companies' corporate insiders have bought large amounts of stock. These insiders are finding some value in the market, which warrants a closer look at these stocks. Here's a look at five stocks whose insiders have been doing some big buying per SEC filings.

Clean Energy Fuels

One energy player that insiders are snapping up a big amount of stock in here is Clean Energy Fuels (CLNE), which is engaged in the business of selling natural gas fueling solutions to its customers mainly in the U.S. and Canada. Insiders are buying this stock into modest strength, since shares are up 6.1% so far in 2013.

Clean Energy Fuels has a market cap of $1.18 billion and an enterprise value of $1.35 billion. This stock trades at a reasonable valuation, with a price-to-sales of 3.15 and a price-to-book of 2.11. Its estimated growth rate for this year is 46.7%, and for next year it's pegged at -27.5%. This is not a cash-rich company, since the total cash position on its balance sheet is $148.26 million and its total debt is $368.13 million.

>>5 Stocks Ready for Breakouts

The CEO just bought 127,000 shares, or about $1.61 million worth of stock, at $12.69 per share.

From a technical perspective, CLNE is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock has just started to trend back above both of those key moving averages with decent upside volume flows. That move is quickly pushing shares of CLNE within range of triggering a near-term breakout trade.

If you're bullish on CLNE, then I would look for long-biased trades as long as this stock is trending above its 50-day at $12.79 or above more support at $12.20, and then once it breaks out above some near-term overhead resistance at $13.58 a share with high volume. Look for a sustained move or close above that level with volume that hits near or above its three-month average action of 942,047 shares. If that breakout hits soon, then CLNE will set up to re-test or possibly take out its next major overhead resistance levels at $14.48 to its 52-week high at $14.82 a share. Any high-volume move above those levels will then give CLNE a chance to tag $17 to $18.

Home Depot

Another home improvement retailer that insiders are active in here is Home Depot (HD), which sells an assortment of building materials, home improvement and lawn and garden products and provides a number of services. Insiders are buying this stock into decent strength, since shares are up 22% so far in 2013.

>>5 Rocket Stocks to Buy as Mr. Market Climbs

Home Depot has a market cap of $108 billion and an enterprise value of $116 billion. This stock trades at a reasonable valuation, with a trailing price-to-earnings of 22.52 and a forward price-to-earnings of 17.41. Its estimated growth rate for this year is 19%, and for next year it's pegged at 18.4%. This is not a cash-rich company, since the total cash position on its balance sheet is $3.42 billion and its total debt is $12.76 billion. This stock currently sports a dividend yield of 2.1%.

A director just bought 100,000 shares, or $752,000 worth of stock, at $75.20 per share.

From a technical perspective, HD is currently trending above its 200-day moving average and just below its 50-day moving average, which is neutral trendwise. This stock recently formed a double bottom chart pattern after it found support just above its June low of $72.03 a share after the stock hit $72.21 a share this move. Shares of HD have started to rebound higher off that $72.21 low and it's now moving within range of triggering a near-term breakout trade.

If you're in the bull camp on HD, then look for long-biased trades as long as this stock is trending above some near-term support levels at $74 or at $73, and then once it breaks out above its 50-day at $76.85 a share with high volume. Look for a sustained move or close above that level with volume that registers near or above its three-month average action of 7.25 million shares. If that breakout triggers soon, then HD will set up to re-test or possibly take out its next major overhead resistance levels at $80 to its 52-week high at $81.56 a share.

Illinois Tool Works

One industrial conglomerate that insiders are jumping into here is Illinois Tool Works (ITW), which is a manufacturer of a range of industrial products & equipment. Insiders are buying this stock into solid strength, since shares are up 23% so far in 2013.

Illinois Tool Works has a market cap of $33 billion and an enterprise value of $35 billion. This stock trades at a reasonable valuation, with a trailing price-to-earnings of 14.9 and a forward price-to-earnings of 16.2. Its estimated growth rate for this year is 3.7%, and for next year it's pegged at 10%. This is not a cash-rich company, since the total cash position on its balance sheet is $2.77 billion and its total debt is a $5.07 billion. This stock currently sports a dividend yield of 2.3%.

>>5 Hated Earnings Stocks You Should Love

The CFO just bought 7,000 shares, or about $519,000 worth of stock, at $74.25 per share.

From a technical perspective, ITW is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock has been uptrending strong for the last six months, with shares soaring higher from its low of $59.68 to its intraday high of $75.63 a share. During that move, shares of ITW have been consistently making higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of ITW within range of triggering a major breakout trade.

If you're bullish on ITW, then look for long-biased trades as long as this stock is trending above its 50-day at $72.86 or above more support at $71.07, and then once it breaks out above its new 52-week high at $75.63 a share with high volume. Look for a sustained move or close above that level with volume that hits near or above its three-month average volume of 1.72 million shares. If that breakout triggers soon, then ITW will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that move are $80 to $85 a share.

Digital Realty Trust

One real estate investment trust player that insiders are in love with here is Digital Realty Trust (DLR), which is engaged in the business of owning, acquiring, developing, redeveloping and managing technology-related real estate. Insiders are buying this stock into weakness, since shares are off by 19% so far in 2013.

Digital Realty Trust has a market cap of $7 billion and an enterprise value of $12 billion. This stock trades at a reasonable valuation, with trailing price-to-earnings of 38.19 and a forward price-to-earnings of 10.43. Its estimated growth rate for this year is 8.4%, and for next year it's pegged at 9.2%. This is not a cash-rich company, since the total cash position on its balance sheet is $24.26 million and its total debt is $4.7 billion. This stock currently sports a dividend yield of 5.7%.

>>5 REITs to Call Bernanke's Bluff

The CFO just bought 10,000 shares, or about $529,000 worth of stock, at $52.94 per share.

From a technical perspective, DLR is currently trending below both its 50-day and 200-day moving averages, which is bearish. This stock recently formed a double bottom chart pattern at $50.23 to $50.26 a share. Following that bottom, shares of DLR have started to spike notably higher and it's quickly moving within range of triggering a big breakout trade.

If you're bullish on DLR, then look for long-biased trades as long as this stock is trending some key near-term support at $52 or at $50.23, and then once it breaks out above some near-term support levels at $55.44 to $55.65 a share to its 50-day at $55.94 a share with high volume. Look for a sustained move or close above those levels with volume that hits near or above its three-month average volume of 1.65 million shares. If that breakout hits soon, then DLR will set up to re-test or possibly take out its next major overhead resistance levels at its 200-day at $62.15 a share to more resistance at $64.47 a share.

Energy Transfer Partners

One final name with some big insider buying is Energy Transfer Partners (ETP), which is a publicly traded partnership owning and operating a portfolio of energy assets. Insiders are buying this stock into notable strength, since shares are up 16% so far in 2013.

>>5 Stocks Rising on Big Volume

Energy Transfer Partners has a market cap of $18 billion and an enterprise value of $35 billion. This stock trades at a premium valuation, with a trailing price-to-earnings of 32.30 and a forward price-to-earnings of 20.44. Its estimated growth rate for this year is -45.4%, and for next year it's pegged at 1.7%. This is not a cash-rich company, since the total cash position on its balance sheet is $532 million and its total debt is a whopping $17.41 billion. This stock currently sports a dividend yield of 7%.

A director bought 20,000 shares, or about $1.03 million worth of stock, at $51.82 per share.

From a technical perspective, ETP is currently trending above its 200-day moving average and just below its 50-day moving average, which is neutral trendwise. This stock has been downtrending over the last month and change, with shares falling from its high of $54.85 a share to its recent low of $50 a share. During that move, shares of ETP have been making mostly lower highs and lower lows, which is bearish technical price action.

If you're bullish on ETP, then look for long-biased trades as long as this stock is trending above some key near-term support levels at $50 or at $49.40, and then once it breaks out back above its 50-day at $51.36 a share with high volume. Look for a sustained move or close above that level with volume that hits near or above its three-month average action of 1.77 million shares. If that breakout hits soon, then ETP will set up to re-test or possibly take out its next major overhead resistance levels at $53 to its 52-week high at $54.85 a share.

To see more stocks with notable insider buying, check out the Stocks With Big Insider Buying portfolio on Stockpickr.

-- Written by Roberto Pedone in Delafield, Wis.

RELATED LINKS:

10 Best Biotech Stocks To Buy Right Now

>>Why Wall Street Got Apple Wrong

>>5 Stocks Under $10 Making Big Moves

>>4 Stocks Within Range of Breakouts

Follow Stockpickr on Twitter and become a fan on Facebook.

At the time of publication, author had no positions in stocks mentioned.

Roberto Pedone, based out of Delafield, Wis., is an independent trader who focuses on technical analysis for small- and large-cap stocks, options, futures, commodities and currencies. Roberto studied international business at the Milwaukee School of Engineering, and he spent a year overseas studying business in Lubeck, Germany. His work has appeared on financial outlets including

CNBC.com and Forbes.com. You can follow Pedone on Twitter at www.twitter.com/zerosum24 or @zerosum24.

LinkedIn Capital Raise Aims to Bolster Its Finances Rather Than Shareholder Gains

LinkedIn Corp. (NYSE: LNKD) has filed a registration statement with the U.S. Securities and Exchange Commission (SEC) for a secondary offering of $1 billion in the company's Class A common stock. The underwriters have a 30-day option on an additional 15% of the number of shares in the offering. No per share price nor number of shares was specified.

According to the filing, LinkedIn plans to use the proceeds:

[T]o increase our financial flexibility and to further strengthen our balance sheet. We intend to use the net proceeds from the shares we are offering primarily for general corporate purposes, including working capital, further expansion of our product development and field sales organizations, international expansion, general administrative matters and for capital expenditures, including infrastructure. In addition, we may use a portion of the proceeds from this offering for strategic acquisitions of, or investments in, complementary businesses, technologies or other assets.

That's some war chest. The company reported more than $870 million in cash and short-term investments at the end of June and when receivables are tossed in, well, the total reaches beyond $1 billion.

Last year the company spent about $452 million on SG&A and another $260 million on R&D, and today's announced stock offering would indicate that the company expects these expenditures to rise even higher. The surprising thing is that investors have not rebelled — yet.

Shares are trading down in after-hours trading on Thursday at $241.30, off about 2% from the closing price of $246.13. The stock's 52-week range is $94.75 to $247.98.

UAW in Talks to Represent VW Plant Workers in Tenn.

Erik Schelzig/APWorkers assemble a Volkswagen Passat at the German automaker's Chattanooga, Tenn., plant. DETROIT -- Volkswagen AG and the United Auto Workers said they are in talks about the U.S. union's bid to represent workers at the German carmaker's Tennessee plant, which would be a milestone in the UAW's long-running effort to organize foreign-owned auto plants. Volkswagen officials, in a letter distributed to workers at the Chattanooga, Tenn., plant Thursday night and Friday morning shifts, said worker representation at the plant can only be realized by joining with a U.S. trade union. "In the U.S., a works council can only be realized together with a trade union," Fischer's letter says. "This is the reason why Volkswagen has started a dialogue with the UAW in order to check the possibility of implementing an innovative model of employee representation for all employees." The letter to the 2,500 Chattanooga workers was signed by Frank Fischer, chief operating officer and manager of the plant, and Sebastian Patta, head of human resources in Chattanooga. UAW President Bob King has been trying without success thus far to organize foreign-owned, U.S.-based auto plants to bolster membership in the union, which has fallen from its peak in the late 1970s. The UAW has been working with the German union IG Metall to try to organize workers at the Volkswagen plant. King is open to what Fischer called "an innovative model" in order to gain acceptance by workers at foreign-owned auto plants, which are primarily in the U.S. South.

"VW workers in Chattanooga have the unique opportunity to introduce this new model of labor relations to the United States, in partnership with the UAW," the UAW said in a statement Friday morning. "If Bob King can get his foot in the door at Chattanooga, even if it's just a works council, it's pretty significant," a former auto executive at a foreign automaker with U.S. plants, who wished to remain anonymous, said earlier this week. On Wednesday, during a call about Volkswagen's U.S. sales, Jonathan Browning, head of the company in the United States, said: "We've been very clear that that process has to run its course, that no management decision has been made and that it may or may not conclude with formal third-party representation." Browning also said that ultimately, the decision on whether to have third-party representation will be decided by Chattanooga's workers by a formal vote. There was no indication in the letter to workers when such a vote would be held. The UAW also confirmed that King met last Friday with VW executives and officials from the company's "global works council," which represents VW blue- and white-collar employees around the world. The UAW said last week's meeting, "focused on the appropriate paths, consistent with American law, for arriving at both Volkswagen recognition of UAW representation at its Chattanooga facility and establishment of a German-style works council." At VW plants, workers are represented by so-called works councils, which include laborers as well as executives who cooperate to determine issues ranging from company strategy to job conditions. They do not negotiate wages or benefits. Volkswagen has about 100 plants worldwide, and all of them except for the Chattanooga factory and the company's six plants joint venture plants in China have such a council, an expression of the company's belief in what it calls "co-determination." While the UAW, and VW in its letter to Chattanooga workers, say that a U.S. trade union must be allied with any group of workers at a foreign-owned company, some disagree. "Volkswagen workers can discuss their work with their employer without UAW unionization," Mark Mix, president of the anti-union National Right to Work Foundation, said in a statement Thursday. "The UAW's campaign of misrepresentation is meant only to misinform workers into thinking that they have no choice but to unionize," Mix said. The anti-union organization is based in Virginia.

By Michael Zak | AOL Autos

A recent Interest.com study looked at the 25 largest metropolitan areas in the United States to see which median-income households in those respective areas can afford to purchase a new car, the average price of which was $30,550 in 2012, according to TrueCar. The study found that in only one city can residents actually afford a car with this sticker price -- Washington, D.C. Households with an average income in Washington, D.C. can afford a payment of up to $628, which would allow for purchase of a $31,940 vehicle. The next closest city, San Francisco, can only afford $537 per month, equating to a $26,786. While it's not news that Americans like to buy things that they can't afford, the data is a little surprising given how many great cars there are out there for well under $30,000. Solid hybrids, CUVs, sedans and sports cars can all be had for less than this.

Purging Your Facebook Friends Could Be Good for Your Finances

Hot Growth Stocks To Invest In 2014

Getty Images We're taught when we're young to be leery of peer pressure. As we grow older, we like to think we've outgrown its effects. But that isn't always the case -- especially when it comes to our finances. Some companies are hoping to exploit this fact after determining that a person's social connections can reveal a lot about how they handle money, according to a recent CNNMoney article. Armed with this revelation, a slew of start-ups -- like Lenddo, Kabbage, and Kreditech -- are using a person's social connections -- his Facebook (FB) friends, for example -- to determine his creditworthiness. If this new mode of measurement takes off, you'll have a lot more to worry about than what's being reported on your credit history. Time to Delete That Friend Who's Always Behind On His Bills? Although it's unlikely this data will replace the system banks currently use to decide how much they'll loan you and at what rate (after all, it'd be a relatively easy system to game by simply unfriending those of your associates who are horrible at budgeting), it should make you think twice about your financial influences. The idea that your peers influence your beliefs about reality isn't all that new. In 1935, Turkish social psychologist Muzafer Sherif designed an experiment in which he shone a dot of light on a wall in a dark room and asked participants how far it moved. The light never actually moved, but due to a trick of the eye, it appeared to. The participants took the test multiple times, and repeatedly gave answers that remained fairly consistent for each individual. Then Sherif put his test subjects into groups of people who had given a different measurement for how much the light moved. In that scenario, each participant changed his original answer to match whatever the consensus was among the group. Even when asked later on, away from the group, how much the light moved, the individual stuck to the group consensus, abandoning his original answer. Sherif's experiment proved that social proof (the academic term for peer pressure) is a powerful force that can change our beliefs and our behaviors, no matter how convinced we are that we're correct. The Joneses Are Clouding Your Judgment Believe it or not, experts have determined that social pressure is an even more powerful force than money. A 2010 article in The Wall Street Journal lists multiple real-life examples in which a statement like "77 percent of your neighbors already do this" is more successful in getting someone to change their behavior than stating, "You could save $54 on your next bill by doing this." This sentiment plays out in many of our everyday purchases -- from the car we drive to the house we buy to even the food we eat and the clothes we wear. "Keeping up with the Joneses" can cause us to splurge more often than we should -- often to the detriment of our finances. So What's a Person to Do? I'm not advising you stop associating with all your friends who are big spenders. But at the very least, you should take an honest look at who you spend most of your time with -- and whether their financial goals and behaviors align with yours, and what you want yours to be. Friends who consistently lure you into shopping trips or nights out on the town may be fun to hang out with. But they might also cause you to stray from your budget. Friends who regularly show off their latest big purchase, or invite you over for dinner in their new, larger home might subconsciously convince you to make an even bigger purchase. And yet beneath it all, these friends probably have little savings to show for their lavish lifestyle. So choose your friends wisely. And be honest to those less frugal than you about your budget and the importance you give to saving. After all, it might be better to see a friendship or two fade now than to spend your retirement years regretting the peer pressure that depleted your savings.

Is Salesforce a Risky Investment?

With shares of Salesforce.com (NYSE:CRM) trading at around $40.95, is CRM an OUTPERFORM, WAIT AND SEE or STAY AWAY? Let's analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

C = Catalyst for the Stock's Movement

Understanding the Salesforce story is relatively simple. Salesforce has managed to consistently increase revenue on an annual basis, but it has difficulty delivering profits. Below are Q1 revenue numbers.

Subscription & Support up 28.5 percent year-over-year Professional Services & Other up 25.3 percent year-over-year

Geographically:

Americas up 30.0 percent Europe up 38.0 percent Asia up 7.0 percent

Up to this point, one might wonder why shorts are all over this stock. After all, as long as there is revenue growth, there is potential. However, in Q1, gross margin dropped 160 bps to 76.6 percent, and operating expenses increased 28.6 percent. The biggest expenses have been R&D, G&A, and sales and marketing.

Another issue investors have with Salesforce is creative accounting. Investors have a reason to oppose executives being paid via stock-based compensation, but it's also ironic that there are creative accounting concerns when the company can't deliver consistent profits. This is a rarity.

NEW! Discover a new stock idea each week for less than the cost of 1 trade. CLICK HERE for your Weekly Stock Cheat Sheets NOW!

The chart below shows some basic fundamentals for Salesforce, Oracle Corporation (NASDAQ:ORCL), and International Business Machines Corporation (NYSE:IBM).

	CRM	ORCL	IBM
Trailing P/E	N/A	15.89	14.32
Forward P/E	64.97	11.69	11.32
Profit Margin	-9.81%	28.46%	16.05%
ROE	-14.92%	24.29%	82.86%
Operating Cash Flow	806.87M	13.72B	19.32B
Dividend Yield	N/A	0.70%	1.80%
Short Position	68.20%	1.10%	1.60%

It’s obvious that Saleforce can’t hold a candle to Oracle and IBM on a fundamental level. Let's take a look at some more important numbers prior to forming an opinion on this stock.

T = Technicals Are Mixed

Salesforce has outperformed Oracle and IBM over a three-year time frame, which is impressive. However, Salesforce has been the weakest performer year-to-date.

	1 Month	Year-To-Date	1 Year	3 Year
CRM	-2.44%	-2.80%	24.74%	84.76%
ORCL	1.57%	2.70%	32.89%	54.98%
IBM	3.42%	9.74%	12.13%	72.20%

At $40.95, Salesforce is trading below its averages.

50-Day SMA	42.85
200-Day SMA	42.35

NEW! Discover a new stock idea each week for less than the cost of 1 trade. CLICK HERE for your Weekly Stock Cheat Sheets NOW!

E = Equity to Debt Ratio Is Normal

The debt-to-equity ratio for Salesforce is higher than the industry average of 0.30, but it still qualifies as normal.

	Debt-To-Equity	Cash	Long-Term Debt
CRM	0.69	2.10B	1.69B
ORCL	0.45	33.41B	19.75B
IBM	1.74	12.06B	33.40B

E = Earnings Have Been Poor

Earnings are the biggest problem for Salesforce. The annual trend is not good. Revenue can assist a stock’s performance for a considerable amount of time, especially in a bull market, but once the party ends, investors and traders will opt for consistently profitable companies.

Fiscal Year	2009	2010	2011	2012	2013
Revenue ($) in millions	1,077	1,306	1,657	2,267	3,050
Diluted EPS ($)	0.09	0.16	0.12	-0.02	-0.48

Looking at the last quarter on a year-over-year basis, revenue increased but the loss widened. A similar pattern played itself out on a sequential basis.

Quarter	Apr. 30, 2012	Jul. 31, 2012	Oct. 31, 2012	Jan. 31, 2013	Apr. 30, 2013
Revenue ($) in millions	695.47	731.65	788.40	834.68	892.63
Diluted EPS ($)	-0.04	-0.02	-0.39	-0.04	-0.12

Now let's take a look at the next page for the Trends and Conclusion. Is this stock an OUTPERFORM, a WAIT AND SEE, or a STAY AWAY?

Conclusion

Salesforce is trading at 65 times forward earnings, which doesn't leave much margin for error. The stock is down in what has been a strong market year-to-date, guidance was underwhelming, competition is likely to increase, there are currency headwinds, and margins and net income have seen consistent declines since 2010.

Payroll to Population Employment Rate Dips in August: Gallup

In a tracking survey that estimates the percentage of the U.S. population employed at least 30 hours a week, Gallup reports that the Payroll to Population (P2P) employment rate fell from 44.6% in July to 43.7% in August. The P2P rate in June was 44.8%, the highest reading so far in 2013.

In August 2012 the P2P rate was 45.3%, just slightly below a 45.7% reading in October 2012, a three-year high.

Gallup's seasonally adjusted unemployment rate in August rose from 7.4% in July to 8.6%. The "official" number due out Friday from the Bureau of Labor Statistics is expected to remain flat at 7.4%. On an unadjusted basis, Gallup's August unemployment rate rose to 8.7%, up from 7.8% in July and 8.1% in August 2012.

According to Gallup, its P2P metric is based on the entire population, not just those in the workforce as is the case with unemployment rate computations, nor does the survey include the self-employed, part-time workers, the unemployed or workers who are out of the workforce.

Gallup said that the percentage of part-time workers who want full-time jobs fell from 9.5% in July to 8.7% in August, its lowest level so far this year.

Gallup also reported that the workforce participation rate fell slightly from 67.7% in July to 66.4% in August. Workforce participation also fell year-over-year, from 68.1% in August 2012.

Friday's report from the Bureau of Labor Statistics is unlikely to show a drop in the unemployment rate, according to Gallup, and may even show a slight increase. Gallup also notes that unemployment in September already has begun to decline and is a "promising" sign for better employment numbers this month.

Hot Safest Stocks To Buy For 2014

Is Verizon a Buy?

With shares of Verizon (NYSE:VZ) trading around $50, is VZ an OUTPERFORM, WAIT AND SEE or STAY AWAY? Let's analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

T = Trends for a Stock’s Movement

Verizon is a provider of communications, information and entertainment products and services to consumers, businesses and governmental agencies. It operates in two primary segments: Verizon Wireless and Wireline. Verizon Wireless's communications products and services include wireless voice and data services and equipment sales, which are provided to consumer, business and government customers across the United States. Wireline's communications products and services include voice, Internet access, broadband video and data, Internet protocol network services, network access, long distance, and other services. As consumers and companies strive to communicate at increasing rates, Verizon stands to see a rising profits as a main provider. Look for rising communications, information, and entertainment to drive profits for Verizon.

NEW! Discover a new stock idea each week for less than the cost of 1 trade. CLICK HERE for your Weekly Stock Cheat Sheets NOW!

T = Technicals on the Stock Chart are Strong

Verizon stock has broken above a key price level that extended back to the early 2000s. The stock is now consolidating a bit so it may need a little time before it really gets going. Analyzing the price trend and its strength can be done using key simple moving averages. What are the key moving averages? The 50-day (pink), 100-day (blue), and 200-day (yellow) simple moving averages. As seen in the daily price chart below, Verizon is trading around its rising key averages which signal neutral to bullish price action in the near-term.

(Source: Thinkorswim)

Taking a look at the implied volatility (red) and implied volatility skew levels of Verizon options may help determine if investors are bullish, neutral, or bearish.

	Implied Volatility (IV)	30-Day IV Percentile	90-Day IV Percentile
Verizon Options	22.56%	80%	79%

What does this mean? This means that investors or traders are buying a very significant amount of call and put options contracts, as compared to the last 30 and 90 trading days.

	Best Cheap Stocks For 2014 Put IV Skew	Call IV Skew
July Options	Steep	Average
August Options	Steep	Average

As of today, there is an average demand from call buyers or sellers and high demand by put buyers or low demand by put sellers, all neutral to bearish over the next two months. To summarize, investors are buying a very significant amount of call and put option contracts and are leaning neutral to bearish over the next two months.

On the next page, let’s take a look at the earnings and revenue growth rates and the conclusion.

E = Earnings Are Increasing Quarter-Over-Quarter

Rising stock prices are often strongly correlated with rising earnings and revenue growth rates. Also, the last four quarterly earnings announcement reactions help gauge investor sentiment on Verizon’s stock. What do the last four quarterly earnings and revenue growth (Y-O-Y) figures for Verizon look like and more importantly, how did the markets like these numbers?

	2013 Q1	2012 Q4	2012 Q3	2012 Q2
Earnings Growth (Y-O-Y)	15.25%	-107.21%	14.29%	12.28%
Revenue Growth (Y-O-Y)	4.17%	5.66%	3.92%	3.69%
Earnings Reaction	2.76%	0.58%	2.37%	-2.94%

Verizon has seen increasing earnings and revenue figures over the last four quarters. From these numbers, the markets have been upbeat about Verizon’s recent earnings announcements.

NEW! Discover a new stock idea each week for less than the cost of 1 trade. CLICK HERE for your Weekly Stock Cheat Sheets NOW!

P = Excellent Relative Performance Versus Peers and Sector

How has Verizon stock done relative to its peers, AT&T (NYSE:T), T-Mobile (NYSE:TMUS), Sprint Nextel (NYSE:S), and sector?

	Verizon	AT&T	T-Mobile	Sprint Nextel	Sector
Year-to-Date Return	15.65%	4.60%	23.99%	11.90%	15.82%

Verizon has been a relative performance leader, year-to-date.

Conclusion

Verizon provides communications products and services at growing rates to consumers and companies worldwide. The stock has recently broken above key price levels and is now consolidating so it may need time before it moves higher. Over the last four quarters, investors in the company have been upbeat as earnings and revenue figures have been improving. Relative to its peers and sector, Verizon has been a year-to-date performance leader. Look for Verizon to continue to OUTPERFORM.

Top Blue Chip Companies To Own In Right Now

After a surprising burst over the last week that sent shares to record highs once again, Wall Street fell back slightly today as the Dow Jones Industrial Average (DJINDICES: ^DJI  ) closed down 32 points or 0.2%. Coca-Cola (NYSE: KO  ) disappointed in its earnings report, as the beverage giant dropped 1.9%, the blue chips' worst performer today. The secular decline in U.S. soda consumption seems to be finally catching up with the world's most valuable brand, as unadjusted profits fell 4%. In addition to weak U.S. sales, the company blamed bad weather, including cold and wet conditions in the U.S. and flooding in Europe, for the poor quarter. Soda volume fell by 4% in North America, but the company still finished with an adjusted earnings per share of $0.63, in line with estimates. Revenue was down 2.5% to $12.75 billion, missing estimates of $12.95 billion.

Top Blue Chip Companies To Own In Right Now: Lionbridge Technologies Inc.(LIOX)

Lionbridge Technologies, Inc. provides language, development, and testing services. Its Global Language and Content segment provides product localization services, such as creating foreign language versions of its clients? products and software applications, including the user interface, online help systems, and documentation; and content translation services, such as translating and maintaining clients? Web-based content, eLearning courseware and training materials, technical support, and sales and marketing information. It also offers technical authoring, eLearning courseware development, and production and integration of content; and global language and content services delivery. The company?s Global Development and Testing segment develops and maintains on-premise, SaaS, and smart phone and tablet applications, as well as provides Web production services. This segment also offers various testing services under the VeriTest brand, including managed test teams, test proc ess design, test automation, functional testing, performance testing, globalization testing, and product certification. In addition, it provides specialized search relevance, online content editorial, keyword optimization, and related services. Its Interpretation segment offers interpretation services for government business and healthcare organizations that require experienced linguists to facilitate communication. It provides interpretation communication services, such as onsite interpretation, over-the-phone interpretation and interpreter testing, training, and assessment services in approximately 360 languages and dialects. The company serves the technology, mobile and telecommunications, Internet and media, life sciences, government, manufacturing, automotive, retail, and aerospace sectors in the Americas, Europe, and Asia. Lionbridge Technologies, Inc. was founded in 1996 and is headquartered in Waltham, Massachusetts.

Advisors' Opinion:

• [By Vodicka]

  Lionbridge Technologies (NASDAQ: LIOX) provides language, development and testing services to businesses all over the world. Its focus is on technology, and it helps its clients manage their enterprise content and technology applications, and supports those efforts with training materials, as well as sales and marketing information. By affecting optimal communication in local languages, it helps its clients capture market share, escalate adoption of their global content and products, increase the return on their enterprise application investments and boost workforce productivity. All while reducing costs! So it’s no wonder that the 10 largest software companies and the five largest Internet portals in the world use LIOX to help them internationalize their products and services.

  This strong customer base helped the company weather the recession, as its top 10 customers expanded their business by more than 8% in the fourth quarter over the third quarter. This helped the company generate $11.7 million in cash flow, improve its gross profit to 33.5% and revenues grow 7% quarter over quarter. That’s definitely a great sign, especially since technology spending is taking flight, and globalization of industry is in a rapid phase of expansion. Buy LIOX under $4.50.

Top Blue Chip Companies To Own In Right Now: Steiner Leisure Limited(STNR)

Steiner Leisure Limited provides spa services and personal care products for men, women, and teenagers worldwide. The company offers beauty care products, including cleansers, toners, moisturizers, lotions, waxing products, cleansing accessories, and other skin care and body products, as well as aromatherapy oils and beauty tools; and hair care products, such as shampoos, conditioners, styling products, and related items. Its services include massages, facials, microdermabrasion, waxing, aromatherapy treatments, seaweed wraps, aerobic exercise, yoga, pilates, hair styling, manicures, pedicures, and teeth whitening, as well as various other beauty and body treatments and services; acupuncture; and medi-spa services comprising BOTOX Cosmetic, Dysport, Restylane, and Perlane. In addition, the company operates approximately 12 post-secondary schools, which provide education in massage therapy, beauty, skin care, and related areas at 30 campuses in 14 states. Further, it provid es procedures for the removal of unwanted facial and body hair in a clinical setting. The company offers its products and services under the Elemis, La Th�apie, Bliss, Rem�e, Laboratoire Rem�e, Mandara Spa, Mandara, Jou, and Chavana brands through department stores; third party retail outlets; distributors; salons; mail orders; and company owned Websites, including www.timetospa.com, www.timetospa.co.uk, www.blissworld.com, www.blisslondon.co.uk, and www.bodyworkmall.com, as well as through the QVC home shopping television channel. As of February 13, 2012, it served 152 cruise ships representing 19 cruise lines; and operated 54 resort spas, 11 urban hotel spas, 6 day spas, and 59 ideal image laser hair removal centers. Steiner Leisure Limited was founded in 1934 and is based in Nassau, the Bahamas.

Hot Blue Chip Stocks For 2014: ComOps Ltd(COM.AX)

ComOps Limited provides business software solutions and services in the areas of enterprise, sales, and workforce management. Its enterprise management products include ComOps BMS, an enterprise resource planning solution, which manages specific business operations by providing real time financial, distribution, and management information; ComOps BI, a product suite for reporting, query, and analysis needs; and Unibis, a suite of integrated software modules that provides enterprise-wide solutions to business and government organizations requiring multi-company/branch/warehouse and currency processing capabilities. The company?s sales management products comprise ComOps SAM, which automates the business process for a mobile work force or team of customer relationship managers and merchandisers; Procure for retail management; and ComOps eCom, an eCommerce solution that helps in developing online sales channels. Its workforce management solutions include Microster, a workfor ce management solution primarily for small to medium sized enterprises; Executives Online, a talent sourcing solution that enables organizations to recruit high quality candidates for permanent, interim, contract, and project management roles; Salvus, a safety, risk, and claims management solution; and ComOps eContent, which designs and delivers multimedia learning and communication content. The company also provides system implementation, managed, and solutions support services. It serves customers in various industries, including fast moving consumer goods, transport and logistics, healthcare, banking and finance, manufacturing, distribution and wholesale, retail, pharmaceutical, construction, hospitality, mining, government, and services. The company was founded in 1972 and is headquartered in North Sydney, Australia.

A Day In The Life Of An Actuary

An actuary uses math and statistics to estimate the financial impact of uncertainty and help clients minimize risk. With a median salary of almost $90,000, the profession has a strong employment outlook and projected job growth, according to the Bureau of Labor Statistics. We take a look at the typical workday of three actuaries who work for different types of companies and who are at different stages in their careers.

Lauren Ford, Actuarial Assistant, Allstate Insurance
Lauren Ford, 24, is an actuarial assistant with Encompass Analytics, an Allstate Insurance subsidiary in Northbrook, Ils., that sells several insurance products for a single premium to consumers. She holds a bachelor's degree in actuarial science and accounting and has worked at Allstate for two years. Before joining the company full time, she worked as an intern for Allstate for two summers. She is currently a pricing actuary for property and casualty insurance.

"Pricing actuaries estimate future losses and expenses so that we can charge an adequate price for insurance," says Ford. Actuaries tend to work for a specific area within the company, such as personal lines (auto and homeowners), specialty lines (boat, motorcycle, etc.) or business insurance. Ford works on personal lines.

Her work varies considerably from day to day depending on the projects she's tackling. She usually works on two or three projects at a time while also attending meetings, sitting in on training sessions and occasionally traveling to field offices. She will spend three or four hours performing analyses such as loss and premium trends, estimating catastrophe exposure, and assessing the rates for different classes or groups of risk.
"These analyses are constantly changing due to items such as technology advances and the evolving nature of the insurance industry and marketplace," she says. Some analyses take a day, while others take weeks. Another two to three hours a day go toward communicating the implications and results of these analyses to sales leaders, agents and product managers, both in written form and in meetings, with a visit in person at least once a year. She also communicates with state insurance regulators.

Allstate reviews its premiums quarterly. It updates other analyses semiannually, such as comparing losses and assessing rates for different classes of risk within a state or region. Annually or every couple of years, the company reviews standards for credibility, develops expense provisions used in ratemaking (such as provisions for acquisition expenses or for licenses and fees), and calculates reinsurance costs based on annual reinsurance contracts.

Ford says she spends an hour or two per day on administrative tasks such as scheduling meetings and responding to inquiries. And as an actuarial student, she spends part of her day preparing for her actuarial exams, which she is halfway through. She also dedicates time every year to recruiting and interviewing on campus at her alma mater, Drake University in Des Moines, Iowa, and giving tours of the home office, hosting lunches and providing job-shadowing opportunities to job candidates.

Actuaries typically work 40 to 50 hours per week, says Ford. "Sometimes we work additional hours to meet a project's deadline, but our schedules are fairly flexible," she says. As a pricing actuary, Ford says she is able to maintain a work-life balance and does not have one season with intense deadlines, so she is able to schedule vacations easily.

"It is a career that requires hard work, but it also comes with high rewards." Ford considers the rewards of her career to be a flexible work schedule, a career that allows for work-life balance, the excellent opportunities for on-the-job training, the strong employment outlook, and the vast exposure to actuarial work as a recent graduate.

Alex M. Tava, Managing Actuary, Cirdan
Alex Tava AGE is a managing actuary for Cirdan Health Systems and Consulting, based in St. Paul, Minn., which provides consulting, strategic planning and data management services, tools and software to organizations such as health insurers, hospitals, clinics, government agencies, employers and unions. He has been working with individual, group and government health insurance programs for 20 years and is an expert in many areas, including Medicare, Medicaid and consumer-directed health products. He is a fellow of the Society of Actuaries and a member of the American Academy of Actuaries.

Tava typically gets to the office around 8:30 am. If he doesn't have a meeting first thing, he'll spend a half hour to an hour reviewing and responding to client and staff emails and planning his day. Around 9:30, he checks in with his staff to get progress reports on any outstanding projects or reports. He also makes sure they are neither overloaded nor idle in terms of their workload. Tava describes his office environment as "very collegial" and as fairly casual unless a client is visiting.

By 10:00 or 10:30 in the morning, he focuses on his own work, such as an analysis he is preparing for a client or an analysis that supports a project another actuary or consultant is preparing. Because the healthcare claims data is complex, much work requires the use of Excel and/or SQL to review data. "It is very beneficial to have at least a modest level of programming knowledge in order to be able review larger data sets," Tava says.

Tava takes an hour for lunch around 11:45. In the afternoon, he may have several meetings, which may be conducted in person, by phone or online. These meetings tend to be internal staff discussions concerning long-term projects or product development, or client meetings to discuss a specific issue or analysis. Other meetings deal with Medicare and Medicaid issues such as rate development, financial reporting or encounter data. Between meetings, he checks his email and checks in with staff.

Around 4:00, he returns to the analysis he was working on in the morning. He also responds to emails and updates principals on project status. He receives a high volume of regulatory communications via email, which he needs to stay current on so he can offer feedback or support to clients.

He typically leaves the office between 6:00 and 7:00 unless a client or regulatory deadline requires him to work later. He says his typical work week is just under 50 hours, but it can range from 40 to 60 hours. He has the flexibility to shift his time around to attend his three young children's events.

A significant portion of his work involves supporting his clients' periodic financial reporting and their state and federal regulatory reporting requirements. He prepares Medicare Part C and Part D bids, NAIC quarterly and annual statement reports, detailed annual revenue reports, and claims projections to support client budgets. He also works on many client projects to respond to data requests from the state agencies responsible for Medicaid rate development.

James A. van Iwaarden, Consulting Actuary, Van Iwaarden Associates
James A. van Iwaarden is a consulting actuary and the owner of Van Iwaarden Associates in Minneapolis. He has more than 30 years of experience in employee benefits consulting and is a fellow of the Society of Actuaries and a fellow of the Conference of Consulting Actuaries. His firm focuses on retirement benefits: pension plans, retiree medical plans, profit-sharing plans and 401(k) plan design. "It's more verbal and less mathematical than many actuarial practice areas, and the longer you're in it, the more verbal it gets," he says.

"A consultant's time is driven by external client needs, rather than internal project plans," van Iwaarden says. "Consulting actuaries tend to work longer hours than those who work in insurance companies, but with more flexibility and travel." Van Iwaarden says his firm is unusually flexible in that everyone is paid by the hour and can work when and where they want. "The 'where' is usually in the office, because we're so much more productive face to face," he says, but they're not in the office on the weekends. "We take all our planned vacations, but we might keep up on email while we're out or do some work on a plane," he adds.

Staff at his consulting business typically begin their days at 8 am checking email newsletters for retirement-industry news and responding to short client questions. At 9 am, the consultant might spend an hour meeting with a staff analyst on a retiree medical valuation to clarify how the client's benefits work and what assumptions the company should use to value the liabilities. For the next hour and a half, the consultant might discuss his company's interpretation of an IRS pension regulation with other consultants and write a memo to document it so they are consistent whenever it applies in the future. Then from 11:30 to 12:00, he or she might perform work for a client company by reviewing a pension benefit calculation for one of the company's retiring employees and emailing it to the company's human resources director.

After an hour lunch break, an actuarial consultant might review the annual government filings an internal analyst has prepared for a pension client, finalize it and forward it to the client to sign and submit. At 2:00, the consultant might prepare a profit-sharing and cash-balance plan design illustration for a prospective client, such as a law firm, to show them how they can maximize their deductible retirement plan contributions. Then, at 3:00, the consultant might contact the attorney of another client to discuss recommended retirement plan changes, such as a new profit-sharing formula to reward successful stores and divisions. The last hour of the workday might be spent peer-reviewing a colleague's draft presentation for a client board meeting and discussing recommended changes to make the presentation clearer. A typical day ends at 5 pm.

Other work the consultants at Van Iwaarden Associates do that doesn't happen every day includes writing proposals for new clients and projects, preparing monthly client bills, attending staff meetings once or twice a month to talk through workflow and technical issues, and composing blog posts and speeches on new developments in the field.

The Bottom Line
"The actuarial career is great for anyone that enjoys analytical problem solving and developing creative business solutions," says Ford. "It is consistently rated as a top profession, and it provides a variety of interesting work, great job security and competitive compensation."