Granite Construction Does Symmetrical Triangle Breakout On Pocket Pivot

Granite Construction stock did a Symmetrical Triangle breakout today on a bullish pocket pivot signal. The breakout has occurred after the company has reported a string of contract wins over the last couple of weeks.

Analysts love Granite Construction stock. Based on their most recently released notes to investors, 6 analysts have a rating of outperform, 4 analysts have a rating of “buy”, 1 analyst has a rating of “hold”, and no analysts rate the stock as either “underperform” or “sell”.

Granite Construction reported earnings today which missed. The company reported EPS of $0.35 versus the $0.60 estimate. However, revenue beat coming in at $762.9 million versus the $678.4 million estimate.

Strong growth is taking place in Granite Construction in 2017. The company reports increased revenue opportunities and a backlog that has crossed above $4 billion for the first time in Granite’s 95 year history!

Granite is one of the largest construction companies in the US but its market cap is only $2.24 billion as of August 1, 2017. That’s a good valuation when you consider that the company’s market cap is about half of its current backlog.

Contracts are pouring in to the company. Here are some of the most recent contract wins:

Jul-31-17 = Granite Awarded $441 Million Joint Venture Design-Build Transit Project in Washington D.C.
Jul-31-17 = Granite Awarded $318 Million Bridge Project in Brooklyn
Jul-27-17 = Granite Awarded $20 Million Dam Project in Northern California
Jul-18-17 = Granite Awarded $855 Million Joint Venture Design-Build Highway Project in Texas
Jun-09-17 = Granite Construction Wins $36M Contract from Caltrans
Jun-07-17 = Granite Awarded $54 Million Highway Rehabilitation Project in Alaska

Can you imagine how big Granite Construction’s backlog will grow if we get a $1 trillion infrastructure spending program?

Public transportation and infrastructure spending overall remains steady and stable, and it will increase significantly in Washington and California.

California’s $52 billion SB 1 transportation bill was passed in April of 2017. The recently enacted 2017-2018 California budget included an increase in state transportation capital funding from less than $2 billion last year to more than $4 billion this year. Here’s the crazy thing. The $4 billion backlog does not include any SB 1 projects yet because California has said that almost half of the $4 billion will not be available for projects until the first six months of 2018.

Spending Needed To Upgrade Infrastructure

The $1 trillion infrastructure spending is only a fraction of what is needed to repair America’s aging infrastructure. The ASCE published this graphic for how much money is needed now to repair this country’s infrastructure. Note: All numbers are in billions.

Source: ASCE

The ASCE estimates that we will need to spend $4.59 trillion to update our old infrastructure.

Granite Construction Stock

Huge buying took place today after the earnings report. Notice the bullish pocket pivot (blue dot) today. The rising large player volume as the stock was dropping totally predicted the big breakout move today.

Unfortunately GVA is not a good setup right now. Prices have extended too far to the upside. For a better entry, add it to your watch list and wait for a consolidation. This market is too dangerous to be chasing any overvalued stock.

What are your thoughts on infrastructure spending and do you have an infrastructure stock you’re tracking? Leave your comments below. To find more good stocks to buy check out this lesson.

Vulcan Materials Stock Symmetrical Triangle On Possible Earnings Beat

Vulcan Materials stock has formed a Symmetrical Triangle on a possible earnings beat when they report on August 1, 2017. I like the chart setup enough to go long this stock in my personal trading account.

Vulcan Materials News

Kiplinger’s Personal Finance called Vulcan Materials the best stock in Alabama (here). Kiplinger writes:

Vulcan is trading near an all-time high thanks to a run-up in the stocks of building-materials companies following the presidential election. And if the current administration goes forward with its plan to spend $1 trillion to revamp the nation’s infrastructure, few companies stand to benefit more than Vulcan.

Vulcan Materials Stock Chart

VMC shows a beautiful positive divergence between the Effective Volume study of large players volume and the price chart. The Twiggs Money Flow does not support the large players volume but does appear to be rounding up.

Prices have been consolidating lately and the volatility has been reduced. The chart is very close to forming a momentum squeeze setup.

The TSI has given a beautiful buy signal on a bullish cross.

There is a support zone below the current price at $126.44, a stop order could be placed below this zone.

The chart looks like a good setup as we head into the August 1, 2017 earnings report which is likely to beat IMO. This is a short-term swing long trade with a sell either before, or the day after, earnings.

What do you think about Vulcan Materials stock? Leave your comment below.


Trump US Dollar Trade Falls Apart As Investors Race For the Exit

Shortly after President Trump won the election in November of 2016, big money raced into the US dollar. The idea was that a new President with an America first agenda in which China would be labeled a currency manipulator had to be good for the US dollar. Lots of money raced into the US dollar and in funds like the PowerShares DB US Dollar Index Bullish Fund (UUP).

US Dollar Chart

Within two months of Trump winning the White House, UUP was up by more than 5.5% but shortly after January when Trump took office, UUP has been in a strong downtrend since. In fact, UUP is -3% lower than when Trump won the White House in November. Investors have now pulled more than $265 million from the fund this year.

Trump didn’t label China a currency manipulator on day one of his presidency and so the US dollar fell. It fell again in March when we all learned of the stupid idea that tax cuts and an infrastructure spending program were not going to take place until the Affordable Care Act was repealed.

In each of Trump’s legislative defeats on repealing the Affordable Care Act, it has pushed out tax cuts and an infrastructure jobs program further and we are seeing that reality reflected in the US dollar.

Presidential Theme Investing Does Not Work

The massive losses piled up by traders who went long the US dollar serves as a reminder that presidential theme investing doesn’t work.

I learned this lesson the hard way with Obama back in 2009. I went long solar power stocks when Obama won thinking that with his liberal anti-oil, anti-coal agenda, solar power companies would surely benefit.

I suffered massive losses and it took me years to get my trading account balance back up to where it was before the disastrous “go long solar on Obama” trade.

I don’t do presidential theme investing anymore.

I did jump into cement stocks back in February as a play on Trump’s border wall. I didn’t do it because of Trump. I did it because cement charts started ripping higher as other traders were betting on cement and I figured I could take a little bit of money from those presidential theme traders. I rode up cement and then sold it quickly when it started to look topy.

I recommend against doing presidential theme investing unless you are going for a quick swing trade on a technical setup.

Jamie Dimon Says Stupid S**t Is Why Congress Isn’t Helping Americans

Jamie Dimon said it’s an embarrassment being an American citizen and traveling abroad because we are such a bureaucratic and confusing society.

David George said Jamie Dimon’s rant was meant to indirectly communicate with Congress that they need to get off their hands and get something done for the American people.

Dobb’s went on the attack after Jamie Dimon’s comments calling him the least grateful corporatists in the US:

Now that everyone has gotten that off their chest, do you think we can raise the debt ceiling, cut taxes, and launch a $1 trillion infrastructure program to get Americans back to work? Saudi Arabia has already agreed to invest billions in US infrastructure spending so what’s the hold up?

The Affordable Care Act Holds On As CBO Torpedoes Senate Replacement Bill

The CBO just torpedoed the replacement of the Affordable Care Act today. The reason we care as stock traders is that the Trump Administration feels it can’t pass tax reform until it deals with healthcare first. The torpedo from the CBO today means that lower taxes and an infrastructure spending bill just got delayed again.

The Senate bill to repeal the Affordable Care Act was edging toward complete failure on Monday following the nonpartisan Congressional Budget Office (CBO) stating that it would increase the number of people without health insurance by 22 million by 2026.

Insurer Blue Cross and Blue Shield said it was encouraged by the addition of incentives for continued coverage. Molina Healthcare said it preferred the Obamacare mandate, stated the Senate bill, even after revised, would only delay care.

But after the CBO’s statement today, congressmen are running away from the Senate bill as fast as they can.

Senator Ron Johnson of Wisconsin hinted that he would likely oppose taking up the bill on a procedural vote expected as early as Tuesday, meaning that the fall of the Senate bill is likely imminent.

“On the present bill I am not voting to get on it unless it changes,” said Senator Rand Paul (R-Ky.) Asked if that meant he’d vote “no” on the first motion to proceed, the Kentucky Republican said “absolutely” and argued that leadership does not currently have the votes it needs.

Ms. Collins wrote on Twitter on Monday evening that she wanted to work with her colleagues from both parties to correct flaws in the Affordable Care Act, but that the budget office’s report revealed that the “Senate bill won’t do it.”

The report left Senator Mitch McConnell of Kentucky two options: pulling the bill from consideration while he renegotiates, or allowing it to go down in defeat.

The vote could come as soon as Tuesday, or maybe Wednesday.

The Senate bill would decrease federal deficits by a total of $321 billion within a decade, the budget office said.

Mr. McConnell, who’s the chief author of the bill, wanted the Senate to approve it prior to a planned recess for the Fourth of July, but that seems increasingly doubtful. Misgivings in the Republican bill extend beyond some of the moderate and conservative members and Mr. McConnell can lose only two Republicans.

Johnson and Paul, as well as GOP Sens. Ted Cruz (Texas) and Mike Lee (Utah), announced last week that they couldn’t support the bill in its present form.

Under the bill, the budget office said, subsidies to help people buy health insurance could be “considerably smaller than under present law.” Beginning in 2020, the budget office said, deductibles and premiums would be so onerous that few low-income individuals would buy any plan.

For instance, it said, for a 64-year-old having an annual income of $26,500, the net premium in 2026 to get a midlevel silver program, after subsidies, would average $6,500, compared with $1,700 under the Affordable Care Act.

The report stated, for a 64-year-old having an annual income of $56,800, the premium in 2026 would average $20,500 a year, or three times the number expected under the Affordable Care Act.

The budget office report was a significant setback to Senate Republican leaders.

The White House discounted the report, saying that the CBO had “consistently proven it cannot accurately predict the way that healthcare laws will affect insurance coverage.”

The 15 million people the CBO estimates will be uninsured in 2018 is mainly because of the repeal of the penalty associated with being uninsured. The CBO didn’t consider the revised version that included the new waiting period.

Bear Market Coming If Trump Agenda Does Not Move Forward

A bear market is coming if President Trump’s agenda does not move forward quickly. I have been saying for months now that the Federal Reserve is hiking rates not because we are in a strong economy that needs cooling off but instead to save pension fund holders and others who depend on the income generated from bond yields.

The Trump rally ended back in March. That was the turning point when the markets started pricing in the reality that President Trump was being blocked even on a common-sense travel ban from radical Muslim countries that support terrorists and that generally dislike America. If a common-sense travel ban can’t even get put in place, how does Trump’s economic agenda have any hope?

Bear Market Coming As Economy Slows

We are six months into Trump’s presidency and we have no clear plan for raising the debt ceiling when the government runs out of money in August. We have no big comprehensive corporate tax reform yet. We have no tax cuts for working Americans yet. We have no repatriation of trillions of overseas dollars yet. We have no massive infrastructure plan to boost the economy yet. Meanwhile, the Federal Reserve continues to hike rates.

The chart below shows the effects of rate hikes on commercial and industrial loans.

The arrows mark the three rate hikes since the end of the Great Recession. When the Fed hikes rates next week, we could have commercial and industrial loans drop below the zero line and signal a contraction for the first time since the Great Recession.

Today, there’s a greater chance that a bear market will happen than not happen because of trend logic. Trend logic is the idea that a trend will continue until it actually ends. Assume continuation of the previous trend until proven otherwise. The Federal Reserve is on a rate hike up-trend. Commercial and industrial loans are in a downtrend. Assuming these trends continue, the yield curve will go flat or inverted within the next few months. The only thing that will stop this gloomy scenario from taking place is if one of those trends change.

The only thing capable of preventing the next bear market is if Trump’s economic agenda moves forward on tax cuts and infrastructure spending, or if the Federal Reserve does not raise rates in June. Since I see neither of these outcomes happening right now, rather than assume a magical trend change appearing from out of nowhere, it’s better to assume continuation of the previous trends until proven otherwise.

Peter Schiff gave an excellent speech at Cambridge House recently about the deteriorating US economy, check it out:

Ciena Press Release That Needham Raises Price Target

June 2, 2017: There was a Ciena press release today that Needham raised their target to $31 from $30 and that they reiterated a Buy rating on the stock. Needham says that Ciena reported a strong FY2Q with a B-B above 1.0 for the third quarter in a row and the 5th time in the last 6 quarters. On the strength of the quarterly results and the orders in the quarter, Ciena raised its full-year guidance for revenue growth to 8-9% from 7-8%. Needham is increasing their revenue and EPS forecasts as well. Needhamm thought that tone of the call was distinctively upbeat and confident. Management stated Metro Core growth was accelerating and would be a strong multi-year driver.

Ciena Press Releases

Below will be a list of news serving as a database. Organizing the information in this way will give you a quick way to spot trends like earnings and revenue beats. The list will be updated as long as an open position remains on this company. Any new Ciena press release that impacts the stock will be listed below. The news will be organized by date. The newest release will always be listed at the top of the list. If the position in the stock is closed, I will no longer list a Ciena press release below.

May 8, 2017: Ciena Corporation is testing its 50 EMA resistance level on a rising money flow which suggests a 50 EMA breakout is at hand.

The Twiggs Money Flow shows a slight positive divergence and a break above the 0 line would show the stock is under quiet accumulation:

Ciena is the network specialist. We collaborate with customers worldwide to unlock the strategic potential of their networks and fundamentally change the way they perform and compete. Ciena leverages its deep expertise in packet and optical networking and distributed software automation to deliver solutions in alignment with its OP architecture for next-generation networks. We enable a high-scale, programmable infrastructure that can be controlled and adapted by network-level applications, and provide open interfaces to coordinate computing, storage and network resources in a unified, virtualized environment.

Sell TRC Companies For a Monster 72% Win!

March 31, 2017: Sell TRC Companies for a monster +72% win and congratulations if you were able to make money on the trade. TRC Companies announced that it has entered into a definitive merger agreement with affiliates of New Mountain Partners IV, L.P., an investment fund managed by New Mountain Capital, LLC, a leading growth-oriented investment firm headquartered in New York, under which New Mountain will acquire TRC in an all cash transaction valued at $17.55 per share of common stock.

January 17, 2017: TRC Companies acquired the contract to serve as Program Administrator of New Jersey’s Clean Energy Program (NJCEP), which has provided more than $300 million annually in support to homeowners, businesses and government entities upgrading to high-efficiency and renewable energy technology.

All the staff who have been working for the prior NJCEP Administrator, Ameresco Inc. and its wholly owned subsidiary, Applied Energy Group Inc. (AEG), will be joining TRC. Financial terms of the transaction were not disclosed.

TRC and AEG anticipate the transition will be seamless, with the same team continuing in its existing role without interruption. TRC’s Energy Efficiency practice is a growing, national leader in the design and implementation of state energy efficiency programs and provides services similar to the administration of NJCEP in several other states.

November 28, 2016: Sidoti initiates coverage of TRC Companies with a Buy rating and a price target of $14.

TRC is a national engineering, consulting and construction management firm providing integrated services to the power, environmental, infrastructure and oil and gas markets. We serve a broad range of clients in government and industry, implementing complex projects from initial concept to operations.

Hurricane Stocks On As Tropical Storm Matthew Heads For Central Caribbean Sea

The US National Hurricane Center just reported that tropical storm Matthew is heading for the Central Caribbean Sea. The tropical storm is moving west at 15 mph with max sustained winds of 65 mph.

Quanta Services provides infrastructure contracting services to the electric power, gas, telecommunications and cable television industries. After a big storm or flood, they are the emergency response team that will be the first on-site to repair down power lines and broken pipes.

Vulcan Materials produces construction aggregates such as crushed stone, sand, and gravel used in nearly all forms of construction. The thing I like about Vulcan Materials is that public spending will likely increase no matter who wins the Presidential election and that should bode well for construction materials providers like Vulcan.

I also like the Shooting Star pattern on Vulcan which means the stock is likely to pullback which would make for a better entry than Quanta Services.

For a shorter term swing trade, I like Generac Holdings Inc. which is a designer and manufacturer of power generation equipment and other engine powered products.

Notice the beautiful swings on Generac Holdings in the chart below.

Disclosure: I do not hold any position in PWR, VMC, or GNRC.