Trade the Return of the "Socials"

Unexpected growth meets unlikely profits July 31, 2014     Trade the Return of the "Socials"   Unexpected growth meets unlikely profits Time for another big run higher for this sector? Plus: The politics of trading   Greg Guenthner coming to you from Baltimore, MD... Greg Guenthner Growth is good. This week, we're seeing growth in some unusual places. Gross Domestic Product screamed higher during the second quarter after slumping during the unusually cold winter months. Of course, no one really saw that coming. GDP rose 4%, smashing analyst estimates as Americans bought cars and appliances at the fastest pace in almost five years, Bloomberg reports. Oh, and we're starting to see some real growth in social media companies' bottom lines. And as you've probably already guessed, no one saw that coming, either. Yelp In. (NYSE:YELP) reported its first profit ever as a public company Wednesday afternoon. The online review leader earned $2.7 million during the second quarter, compared to a loss of a little less than $1 million last year. And Yelp isn't the only trendy social media name bolstering its bottom line. Earlier this week, Twitter Inc. (NYSE:TWTR) announced earnings of 2 cents per share, along with huge revenue and user growth. Just when analysts and investors turned their backs on the stock, it smashes expectations and jumps almost 30% after hours. Facebook's clearly not the only social media name raking in the dough these days. And these profitable reports are helping dig the social sector out of its funk. After topping out in early March, the Social Media Index cratered for more than two months. Investors took a defensive position and sold out of these stocks. But thanks to a sharp comeback in June--and a secondary breakout this week--social stocks are on the mend and heading higher. If these stocks can recapture some of the magic that vaulted shares to new heights back in February, you could have yet another chance to book huge gains in the sector while the rest of the market chops or moves lower. While you shouldn't "chase" any big gaps higher like we saw with Twitter's earnings announcement, there are plenty of names in this space that could breakout as we get ready for the new trading month to begin. Or, if you want to keep it simple, you can buy shares of the Global X Social Media Index ETF (NASDAQ:SOCL). This is an effective way to take advantage of a basket of social media names without taking on too much risk in the middle of earnings season.         New Law Passed Acknowledging Legitimacy of "Underground Banking"   Just recently, California passed a law making a controversial new banking system legal within the state.   This new banking system is already exploding across the globe. It even has its own ATMs up in cities all over the U.S.   The best part of this type of "bank account": You can actually make money with it.   In fact, a simple deposit of $100 back when the system started in 2009 would have exploded into more than $3.5 million by November of last year.   Click here now to find out how this new account could change banking forever.           Rude Numbers Targets, Predictions and Wild Guesses   $2 billion will be spent by Amazon.com to expand its business in India. The world's largest retailer sees the growth potential as India is on track to be Amazon's fastest country ever to $1 billion in gross sales... $1,288 is where you'll find gold futures this morning. The yellow metal is down $7 in early trading today... $99 buys a barrel of crude today. Oil is back below $100 as it continues to fall from its June highs... 150 points fell from the Nikkei last night. The Japanese index dropped nearly 1% to close out the month... 1,951 is where you'll find S&P futures just before the bell. Stocks are looking at a sharply lower open this morning...     Rude Trends When to Buy... When to Sell   "Well... if one is all about money, they might invest in Asian stocks," a reader comments on my plea to buy the Chinese breakout. "Why don't we Americans do all we can to enrich China and other soon to be adversaries to the US? How about clamoring to see how fast we can make the U.S. third-world!" (I'm going to interrupt this note for just a minute) Sir, I'm trying to help you enrich your own bank account. But that's OK. If you don't want to buy Chinese ADRs, don't do it. There are other opportunities out there... Alrighty. Back to your rant... "Why can't our lawmakers see 37.5% corporate tax rates might have something to do with off shore manufacturing - and our President for that matter? I'm old enough to see the changes in the U.S. and it's not a pretty picture. Greed - absence of oversight - absence of healthy regulation - and US lawmakers only interested in the next election for their cushy salaries is running this country". I feel like we're getting way off-topic here. Let's move on to another trade you hate--coal. "I enjoy investing wisely as much as anyone but isn't an investment in coal an investment of the demise of Our Planet Earth or has some new info I have yet to read espousing the huge benefits to Our Planet for coal which have been unheard of previously, or, is this just for the money?" writes a reader who is really into capitalizing anything to do with "Earth". Look, as I've said before, I don't run a coal power plant in my backyard. The U.S. and plenty of other nations are going to burn coal whether you invest or trade these names or not. That's the reality of the situation. Trends are not related to politics or the environment. I'm only interested in taking the best trades possible--whatever the market gives me. You, of course, are free to do what you want. [Ed. Note: Send your feedback here: rude@agorafinancial.com - and follow me on Twitter: @GregGuenthner]     Ignore At Your Own Peril Today's Must Read Links   6 Simple Steps to Turn $500 into a Fortune in One Year Bigger than Benghazi, the IRS and the NSA Scandals... Combined? A Little-Known IPO Hint: How to Get In Before Stocks Go Public!     BE SURE TO ADD dr@dailyreckoning.com to your address book.       Additional Articles & Commentary: Join the conversation! Follow us on social media:         The Rude Awakening is committed to protecting and respecting your privacy. We do not rent or share your email address. By submitting your email address, you consent to Agora Financial delivering daily email issues and advertisements. To end your Rude Awakening e-mail subscription and associated external offers sent from The Rude Awakening, click here. 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