Microsoft Stock and the Wrath of Gamers

Now that the major players have shown all their cards in the console wars, we know of two features of Microsoft's (NASDAQ: MSFT  ) Xbox One that set it apart from competitors -- and not in a good way. The new Xbox is more expensive than either Sony's or Nintendo's systems, but that can be excused considering Microsoft decided to include its Kinect motion-sensing camera this time around. One thing that many consumers might not accept, though, is a new batch of restrictive digital rights policies that threaten to make things like loaning games to friends or playing with spotty access to the Internet much more complicated.

In the video below, Fool contributor Demitrios Kalogeropoulos argues that Microsoft has more to lose than just dollars and cents from a gamer revolt. Angry SimCity fans turned on Electronic Arts (NASDAQ: EA  ) earlier this year for some of the same reasons, helping to get that company named "Worst in America" in an online poll at Consumerist.com. And Microsoft should have been taking notes, Demitrios says.

Mr. Softy is right that the industry will eventually go all-digital. But that moment isn't here yet, so Microsoft needs to address gamers' concerns about physical discs before it's too late.

It's been a frustrating path for Microsoft investors, who've watched the company fail to capitalize on the incredible growth in mobile over the past decade. However, with the release of its own tablet, along with the widely anticipated Windows 8 operating system, the company is looking to make a splash in this booming market. In a special premium report on Microsoft, a Motley Fool analyst explains that while the opportunity is huge, so are the challenges. The report includes regular updates as key events occur, so make sure to claim a copy of this report now by clicking here.

NASA Leans Back for a #GlobalSelfie for Earth Day

NEW YORK (TheStreet) -- Your friends may tire of your selfies showing up on Facebook  (FB) and Twitter (TWTR), but NASA wants more. The U.S. space agency is asking you to indulge your inner teenager in the interests of planetary science.

To mark Earth Day, Tuesday, April 22, the National Aeronautics and Space Agency is crowdsourcing a photomontage of the planet's various natural environments. Citizens of the world are asked to take a photo of themselves snuggling up with the natural environment and post it on social media with the hashtag #GlobalSelfie.

The agency puts no conditions on the selfies, but asks that they include the outdoors -- "mountains, parks, the sky, rivers, lakes -- wherever you are," according to the agency's Web site.

While the raw collection of portraits will be interesting to people-watching Twitter users, collectively the group will be curated to serve as an earthbound view of the planet, in conjunction with NASA's five 2014 Earth-observing space missions, which provide data recorded from craft in Earth orbit. On the program's Web site, NASA has posted this description: NASA astronauts brought home the first ever images of the whole planet from space. Now NASA satellites capture new images of Earth every second. For Earth Day we are trying to create an image of Earth from the ground up while also fostering a collection of portraits of the people of Earth. Once those pictures stream around the world on Earth Day, the individual pictures tagged #GlobalSelfie will be used to create a mosaic image of Earth -- a new "Blue Marble" built bit by bit with your photos. NASA played a key role in the formation of Earth Day, by providing images of the planet seen from space that became the movement's symbol. The first was the famous "Earthrise" photo taken by Apollo 8 astronauts and showing the planet rising above the Moon's surface. Hippie celebrity and entrepreneur Stewart Brand saw a connection between that photograph, from 1968, and the founding of Earth Day in 1970. In 1972, he ran an image of the full hemisphere, taken by Apollo 17 astronauts the same year, on the cover of The Last Whole Earth Catalog, an influential environmental tools and alternative lifestyles mail order guide. Commonly referred to as "the blue marble," that image of the planet glowing blue in the black field of space represented the fragility and beauty of the natural world and a human responsibility to the planet. It is still closely associated with Earth Day and environmentalism in general. -- Written by Carlton Wilkinson in New York 

Stock quotes in this article: TWTR, FB 

Why Fiesta Restaurant Group's Earnings May Not Be So Hot

Although business headlines still tout earnings numbers, many investors have moved past net earnings as a measure of a company's economic output. That's because earnings are very often less trustworthy than cash flow, since earnings are more open to manipulation based on dubious judgment calls.

Earnings' unreliability is one of the reasons Foolish investors often flip straight past the income statement to check the cash flow statement. In general, by taking a close look at the cash moving in and out of the business, you can better understand whether the last batch of earnings brought money into the company, or merely disguised a cash gusher with a pretty headline.

Calling all cash flows
When you are trying to buy the market's best stocks, it's worth checking up on your companies' free cash flow once a quarter or so, to see whether it bears any relationship to the net income in the headlines. That's what we do with this series. Today, we're checking in on Fiesta Restaurant Group (Nasdaq: FRGI  ) , whose recent revenue and earnings are plotted below.

Source: S&P Capital IQ. Data is current as of last fully reported fiscal quarter. Dollar values in millions. FCF = free cash flow. FY = fiscal year. TTM = trailing 12 months.

Over the past 12 months, Fiesta Restaurant Group burned $7.2 million cash while it booked net income of $14.9 million. That means it burned through all its revenue and more. That doesn't sound so great. FCF is less than net income. Ideally, we'd like to see the opposite.

All cash is not equal
Unfortunately, the cash flow statement isn't immune from nonsense, either. That's why it pays to take a close look at the components of cash flow from operations, to make sure that the cash flows are of high quality. What does that mean? To me, it means they need to be real and replicable in the upcoming quarters, rather than being offset by continual cash outflows that don't appear on the income statement (such as major capital expenditures).

For instance, cash flow based on cash net income and adjustments for non-cash income-statement expenses (like depreciation) is generally favorable. An increase in cash flow based on stiffing your suppliers (by increasing accounts payable for the short term) or shortchanging Uncle Sam on taxes will come back to bite investors later. The same goes for decreasing accounts receivable; this is good to see, but it's ordinary in recessionary times, and you can only increase collections so much. Finally, adding stock-based compensation expense back to cash flows is questionable when a company hands out a lot of equity to employees and uses cash in later periods to buy back those shares.

So how does the cash flow at Fiesta Restaurant Group look? Take a peek at the chart below, which flags questionable cash flow sources with a red bar.

Source: S&P Capital IQ. Data is current as of last fully reported fiscal quarter. Dollar values in millions. TTM = trailing 12 months.

When I say "questionable cash flow sources," I mean items such as changes in taxes payable, tax benefits from stock options, and asset sales, among others. That's not to say that companies booking these as sources of cash flow are weak, or are engaging in any sort of wrongdoing, or that everything that comes up questionable in my graph is automatically bad news. But whenever a company is getting more than, say, 10% of its cash from operations from these dubious sources, investors ought to make sure to refer to the filings and dig in.

With questionable cash flows amounting to only -1.5% of operating cash flow, Fiesta Restaurant Group's cash flows look clean. Within the questionable cash flow figure plotted in the TTM period above, stock-based compensation and related tax benefits provided the biggest boost, at 3.7% of cash flow from operations. Overall, the biggest drag on FCF came from capital expenditures.

A Foolish final thought
Most investors don't keep tabs on their companies' cash flow. I think that's a mistake. If you take the time to read past the headlines and crack a filing now and then, you're in a much better position to spot potential trouble early. Better yet, you'll improve your odds of finding the underappreciated home-run stocks that provide the market's best returns.

Does Fiesta Restaurant Group have what it takes to execute internationally? Take a look at some American restaurant concepts that are generating profits in all over the globe in, "3 American Companies Set to Dominate the World." It's free for a limited time. Click here for instant access to this free report.

We can help you keep tabs on your companies with My Watchlist, our free, personalized stock tracking service.

Add Fiesta Restaurant Group to My Watchlist.

Blackstone Discusses Fannie and Freddie Stake

NEW YORK (TheStreet) -- Blackstone Group  (BX) President and COO Hamilton "Tony" James confirmed the company's preferred equity stake in Fannie Mae  (FNMA) and Freddie Mac  (FMCC) but said he does not believe the asset management giant will drive the debate over the future of the government sponsored enterprises (GSEs).

"I honestly don't think we are going to be the mover and shaker on this," James told TheStreet during a press conference following the company's first quarter earnings release Wednesday. He added the firm does not have so large a position it will be a make or break player in the debate.

"We think we have a plan that makes a lot of sense in terms of getting the GSEs out of being a liability for the government," James said.

James did not elaborate on the plan, though in a follow up email exchange a Blackstone spokesman said the company's plan is distinct from a proposal floated by Fairholme Capital in November that Blackstone was reported to be behind.

"We have our own plan but do not want to comment on details," wrote spokesman Peter Rose.

It seems unlikely government officials would be receptive to any plan backed by private investors, something James, who is friendly with many at the highest levels of government in both major parties, knows better than anyone.

"Clearly this is going to be a highly political process," he said.

GSE reform legislation proposed by Sens. Tim Johnson (D, SD) and Mike Crapo (R., ID) effectively ignores current shareholders, which in addition to Blackstone include high profile investors such as Perry Capital, Fairholme Funds and Pershing Square Capital among many others, as well as consumer advocate Ralph Nader.

It also codifies the Treasury Department's controversial 2012 amendment to the 2008 conservatorship of Fannie and Freddie. The amendment changed the terms of Fannie and Freddie's debt to the government. Instead of owing the Treasury an annual 10% dividend, the GSEs suddenly owed the Treasury all of their profits for an indefinite period, aside from minimal capital buffers. That amendment -- also known as the "net worth sweep" -- is at the crux of many of the roughly 20 lawsuits brought against the government by GSE shareholders. The lawsuits taking issue with the sweep contend it violates the Fifth Amendment of the U.S. constitution's prohibition of the taking of private property for public use without just compensation. Blackstone is not a party to any of the lawsuits, though it will benefit if they succeed. GSO Capital Partners, a unit of Blackstone, commissioned a liquidation analysis of Fannie and Freddie by restructuring firm Alvarez & Marsal. The report, published last month, projected the mortgage giants would be worth about $170 billion combined if they were wound down.

Follow @dan_freed

Stock quotes in this article: FNMA, FMCC, BX 

CollabRx + Affymetrix = Wow! (AFFX, CLRX)

They say you're known by the caliber of company you keep. If that's true for stocks (and it is), then CollabRx Inc. (NASDAQ:CLRX) has a lot to be proud of with its new partnership with Affymetrix, Inc. (NASDAQ:AFFX). On the flipside, Affymetrix should be honored it's inked a deal with CollabRx. In a combination that hasn't been topped since peanut butter and chocolate hooked up to form a Reese's cup, AFFX and CLRX help bring out the best in each other.

Affymetrix, Inc. is a medical diagnostics name. Specifically, AFFX is a "pioneer in microarray technology and a leader in genomics analysis, Affymetrix now develops and provides innovative technologies that enable multiplex and parallel analysis of biological systems at the cell, protein, and gene level, facilitating the rapid translation of results into biology for a better world" Translation: AFFX makes variety of high-functioning tests that can spot very specific forms of cancer.

As for CollabRx, it's aiming to "combine the power of proprietary cloud-based expert systems with insights from the nation's top clinical experts. This approach to molecular medicine provides physicians, patients and researchers with the ability to rapidly and accurately identify relevant drugs, clinical trials, diagnostics, medical tests and therapies associated with specific genetic profiles." In other words, CLRX helps caregivers and diagnostic companies make more sense out of the mountain of information that's now being created by the medical industry's ability to perform genome testing. The primary means of doing that is by leasing access to its curated website, which collects and presents that information in a concise and useful way to caregivers.

Great, but what do the two have to do with one another? Alone, each are potent game-changers in their own way. As a team, however, they can offer a product to the medical community that can't be matched by any other service or tool out there.

And that's exactly what AFFX and CLRX have done.... joined forces.

More specifically, the partnership will optimize the use of CollabRx's Genetic Variant Annotation Service in connection with Affymetrix' OncoScan FFPE Assay Kit and CytoScan Cytogenetics Suite, for the analysis of gene copy number variation in cancer research. In other words, the diagnostics guru and the informatics genius are going to enhance what the other one does by delivering a unified product to their customers.

The need and the market are certainly "there." Over the past twelve months, more than 100,000 research reports on the topic of cancer and cancer treatments have been published. Stirring the pot even further is the fact that there are over 500 new cancer therapies in development, and those drugs are part of more than 10,000 different clinical trials underway. That's on top of what we already know about cancer therapies, and on top of approved drugs that make up the current standard treatment regimen. It's mind-boggling, and it would be impossible for anyone to stay abreast of all the options a cancer patient may have. CollabRx and Affymetrix can solve that problem - and just did - in one fell swoop.

For more on CollabRx, visit its corporate website here. Or, you can read the SCN research report here, or the SCN recommendation here.

3 Stocks Under $10 to Trade for Breakouts

DELAFIELD, Wis. (Stockpickr) -- At Stockpickr, we track daily portfolios of stocks that are the biggest percentage gainers and the biggest percentage losers.

>>5 Stocks Set to Soar on Bullish Earnings

Stocks that are making large moves like these are favorites among short-term traders because they can jump into these names and try to capture some of that massive volatility. Stocks that are making big-percentage moves either up or down are usually in play because their sector is becoming attractive or they have a major fundamental catalyst such as a recent earnings release. Sometimes stocks making big moves have been hit with an analyst upgrade or an analyst downgrade.

Regardless of the reason behind it, when a stock makes a large-percentage move, it is often just the start of a new major trend -- a trend that can lead to huge profits. If you time your trade correctly, combining technical indicators with fundamental trends, discipline and sound money management, you will be well on your way to investment success.

>>5 Rocket Stocks for a Tumbling Market

With that in mind, let's take a closer look at a several stocks under $10 that are making large moves to the upside.

Elbit Imaging

Elbit Imaging (EMITF), together with its subsidiaries, engages in commercial and entertainment centers, hotels, medical industries, residential projects and fashion apparel businesses. This stock closed up 3.1% to 23 cents per share in Tuesday's trading session.

Tuesday's Range: $0.22-$0.23

52-Week Range: $0.16-$2.47

Tuesday's Volume: 658,000

Three-Month Average Volume: 1 million

From a technical perspective, EMITF jumped higher here with lighter-than-average volume. This spike higher on Tuesday is starting to push shares of EMITF within range of triggering a big breakout trade. That trade will hit if EMITF manages to take out some near-term overhead resistance at 24 cents per share with high volume.

Traders should now look for long-biased trades in EMITF as long as it's trending above some key near-term support at 20 cents per share and then once it sustains a move or close above 23 cents per share with volume that hits near or above 1 million shares. If that breakout materializes soon, then EMITF will set up to re-test or possibly take out its next major overhead resistance levels at 28 cents per share to its 50-day moving average of 33 cents per share.

Walter Energy

Walter Energy (WLT) produces and exports metallurgical coal for the steel industry. This stock closed up 4.8% to $8.18 in Tuesday's trading session.

Tuesday's Range: $7.66-$8.25

52-Week Range: $7.07-$21.48

Tuesday's Volume: 8.51 million

Three-Month Average Volume: 6.83 million

From a technical perspective, WLT spiked sharply higher here right above its recent low of $7.20 with strong upside volume. This stock recently formed a double bottom chart pattern at $7.07 to $7.20. Since forming that bottom, shares of WLT have started to spike higher and the stock is now quickly moving within range of triggering a near-term breakout trade. That trade will hit if WLT manages to take out Tuesday's high of $8.25 to some more near-term overhead resistance at $8.65 with high volume.

Traders should now look for long-biased trades in WLT as long as it's trending above those double bottom support levels at $7.20 to $7.07 and then once it sustains a move or close above those breakout levels with volume that hits near or above 6.83 million shares. If that breakout hits soon, then WLT will set up to re-test or possibly take out its next major overhead resistance levels at its 50-day moving average of $9.33 to $9.40. Any high-volume move above those levels will then give WLT a chance to tag $10 to $11.

Midstates Petroleum

Midstates Petroleum (MPO) is engaged in the exploration, development and production of oil, natural gas liquids and natural gas in the U.S. This stock closed up 6.5% to $5.38 Tuesday's trading session.

Tuesday's Range: $5.07-$5.40

52-Week Range: $4.13-$7.04

Tuesday's Volume: 834,000

Three-Month Average Volume: 776,427

From a technical perspective, MPO ripped higher here right above its 50-day moving average of $4.86 with above-average volume. This move is quickly pushing shares of MPO within range of triggering a near-term breakout trade. That trade will hit if MPO manages to take out its 200-day moving average of $5.44 to more near-term overhead resistance at $5.53 with high volume.

Traders should now look for long-biased trades in MPO as long as it's trending above Tuesday's low of $5.03 or above its 50-day at $4.86 and then once it sustains a move or close above those breakout levels with volume that hits near or above 776,427 shares. If that breakout triggers soon, then MPO will set up to re-test or possibly take out its next major overhead resistance levels at $5.98 to $6.41.

To see more stocks that are making notable moves higher, check out the Stocks Under $10 Moving Higher portfolio on Stockpickr.

-- Written by Roberto Pedone in Delafield, Wis.

RELATED LINKS:

>>3 Big Stocks on Traders' Radars

>>5 Stocks to Sell Before It's Too Late

>>Want to Buy Apple? Think Again

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.

Bitcoin exchange Mt. Gox to liquidate, court rules

Mt. Gox, the Tokyo-based Bitcoin exchange that collapsed earlier this year after $425 million worth of its customers' digital currency disappeared, lost its bid to reorganize and will likely be liquidated, a Japanese bankruptcy court administrator said in a notice Wednesday.

The court will also investigate Mt. Gox CEO Mark Karpeles' liability in the collapse of the business, attorney Nobuaki Kobayashi, the court-appointed administrator, said Wednesday in a notice posted on the Bitcoin exchange's website.

Karpeles on Feb. 28 asked a Tokyo bankruptcy court for protection from its creditors while it restructured and reorganized.

Mt. Gox claimed in February that the digital wallets that stored the Bitcoin had been hacked and 850,000 Bitcoin were lost. The company later said it discovered 200,000 Bitcoin in an unused wallet, reducing the lost Bitcoin to 650,000.

A week later, Flexcoin, another Bitcoin exchange, shut down, claiming hackers "robbed" the company of all 896 of its bitcoins valued at $600,000.

The court dismissed Mt. Gox's rehabilitation application Wednesday as too "difficult for the company to carry out," Kobayashi said.

Karpeles "has lost his authority to administer the company's assets," the attorney said.

Once the bankruptcy proceedings begin, court administrators and other experts will examine the company's assets, investigate the disappearance of the Bitcoin and distribute the company's remaining assets among its creditors, the attorney said.

"I will strive to fairly and equitably administer the company's assets," Kobayashi wrote in the notice. He said he would work with the U.S. bankruptcy court, where the company has also filed for relief. A creditors' meeting has not yet been set, he said.

Although the court has not entered its final bankruptcy ruling, Kobayashi said once the bankruptcy proceedings start, "it will be unlikely that the company can restart the exchange."

Karpeles, in a note posted Wednesday on the Mt. Gox website! , said the company had "no prospects for the restart of the business."

The dismissal of the company's application for rehabilitation "created great inconvenience and concerns to our creditors, for which we apologize," the note said.

Follow @DonnaLeinwand on Twitter.

5 Stocks Set to Soar on Bullish Earnings

DELAFIELD, Wis. (Stockpickr) -- Short-sellers hate being caught short a stock that reports a blowout quarter. When this happens, we often see a tradable short squeeze develop as the bears rush to cover their positions to avoid big losses. Even the best short-sellers know that it's never a great idea to stay short once a bullish earnings report sparks a big short-covering rally.

>>5 Rocket Stocks for a Tumbling Market

This is why I scan the market for heavily shorted stocks that are about to report earnings. You only need to find a few of these stocks in a year to help enhance your portfolio returns -- the gains become so outsized in such a short time frame that your profits add up quickly.

That said, let's not forget that stocks are heavily shorted for a reason, so you have to use trading discipline and sound money management when playing earnings short-squeeze candidates. It's important that you don't go betting the farm on these plays and that you manage your risk accordingly. Sometimes the best play is to wait for the stock to break out following the report before you jump in to profit off a short squeeze. This way, you're letting the trend emerge after the market has digested all of the news.

Of course, sometimes the stock is going to be in such high demand that you risk missing a lot of the move by waiting. That's why it can be worth betting prior to the report -- but only if the stock is acting technically very bullish and you have a very strong conviction that it is going to rip higher. Just remember that even when you have that conviction and have done your due diligence, the stock can still get hammered if The Street doesn't like the numbers or guidance.

>>5 Stocks Poised for Breakouts

If you do decide to bet ahead of a quarter, then you might want to use options to limit your capital exposure. Heavily shorted stocks are usually the names that make the biggest post-earnings moves and have the most volatility. I personally prefer to wait until all the earnings-related news is out for a heavily shorted stock and then jump in and trade the prevailing trend.

With that in mind, here's a look at several stocks that could experience big short squeezes when they report earnings this week.

Acacia Research

My first earnings short-squeeze play is patented technologies player Acacia Research (ACTG), which is set to release numbers on Thursday after the market close. Wall Street analysts, on average, expect Acacia Research to report revenue $16.92 million on earnings of 4 cents per share.

>>3 Stocks Rising on Unusual Volume

The current short interest as a percentage of the float for Acacia Research is extremely high at 20.3%. That means that out of the 49.75 million shares in the tradable float, 10.01 million shares are sold short by the bears. The bears have also been increasing their bets from the last reporting period by 5.5%, or by about 520,000 shares. If the bears get caught pressing their bets into a bullish quarter, then shares of ACTG could easily rip sharply higher post-earnings as the bears jump to cover some of their trades.

From a technical perspective, ACTG is currently trending above its 50-day moving average and below its 200-day moving average, which is neutral trendwise. This stock has been uptrending strong for the last four months, with shares moving higher from its low of $12.13 to its recent high of $18.29 a share. During that uptrend, shares of ACTG have been making mostly higher lows and higher highs, which is bullish technical price action. Shares of ACTG are now pulling back to its 50-day moving average, and if that level holds, the stock could be setting up to run higher post-earnings.

If you're bullish on ACTG, then I would wait until after its report and look for long-biased trades if this stock manages to break out above its 200-day at $17.51 and then once it takes out more near-term overhead resistance at $18.29 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 673,777 shares. If that breakout triggers post-earnings, then ACTG will set up to re-fill its previous gap-down-day zone from last October that started just above $20 a share. If that gap gets filled with strong upside volume flows, then ACTG will set up to tag $23 to $25 a share.

I would simply avoid ACTG or look for short-biased trades if after earnings it fails to trigger that breakout and then drops back below its 50-day moving average at $15.14 a share to more near-term support levels at $14.38 to $14.12 a share with high volume. If we get that move, then ACTG will set up to re-test or possibly take out its next major support levels at $13.14 to $13.01 a share, or even its 52-week low at $12.23 a share.

SanDisk

Another potential earnings short-squeeze trade idea is data storage products player SanDisk (SNDK), which is set to release its numbers on Wednesday after the market close. Wall Street analysts, on average, expect SanDisk to report revenue $1.49 billion on earnings of $1.25 per share.

>>5 Stocks to Sell Before It's Too Late

Just recently, Sterne Agee wrote in a note to investors that many semiconductor stocks are attractive following their recent declines. The firm said the fundamental medium to long-term outlook for semiconductor stocks hasn't changed. The companies in the sector should benefit from strong product sales, market share gains and earnings leverage. Sterne Agee thinks SanDisk should benefit from improved supply/demand dynamics in the flash memory market.

The current short interest as a percentage of the float for SanDisk is rather high at 8.4%. That means that out of the 224.14 million shares in the tradable float, 18.94 million shares are sold short by the bears. If the bulls get the earnings news they're looking for, then shares of SNDK could easily soar sharply higher post-earnings as the bears rush to cover some of their bets.

From a technical perspective, SNDK is currently trending above its 200-day moving average and below its 50-day moving average, which is neutral trendwise. This stock has been downtrending over the last few weeks, with shares moving lower from its high of $85.37 to its recent low of $73.11 a share. During that move, shares of SNDK have been making mostly lower highs and lower lows, which is bearish technical price action. That being said, shares of SNDK have managed for now to find support and form a double bottom at $73.03 to $73.11 a share.

If you're in the bull camp on SNDK, then I would wait until after its report and look for long-biased trades if this stock manages to break out back above its 50-day moving average of $76.11 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 4.15 million shares. If that breakout hits, then SNDK will set up to re-test or possibly take out its 52-week high at $85.37 a share.

I would simply avoid SNDK or look for short-biased trades if after earnings it fails to trigger that breakout and then drops back below some key near-term support levels at $73.11 to $73.03 a share with high volume. If we get that move, then SNDK will set up to re-test or possibly take out its next major support levels at its 200-day moving average of $66.91 a share to $65 a share.

Home Loan Servicing Solutions

Another potential earnings short-squeeze candidate is mortgage investment player Home Loan Servicing Solutions (HLSS), which is set to release numbers on Thursday before the market open. Wall Street analysts, on average, expect Home Loan Servicing Solutions to report revenue of $204.44 million on earnings of 53 cents per share.

>>5 Stocks Insiders Love Right Now

The current short interest as a percentage of the float for Home Loan Servicing Solutions is pretty high at 8.3%. That means that out of the 70.02 million shares in the tradable float, 5.77 million shares are sold short by the bears. The bears have also been increasing their bets from the last reporting period by 5.3%, or by about 288,000 shares. If the bears get caught pressing their bets into a strong quarter, then shares of HLSS could easily spike sharply higher post-earnings as the shorts jump to cover some of their positions.

From a technical perspective, HLSS is currently trending above its 50-day moving average and just below its 200-day moving average, which is neutral trendwise. This stock has been trending sideways over the last few weeks, with shares moving between $20.90 on the downside and $22.03 on the upside. A high-volume move above the upper-end of its recent range post-earnings could triggering a decent breakout trade for shares of HLSS.

If you're bullish on HLSS, then I would wait until after its report and look for long-biased trades if this stock manages to break out above its 200-day at $21.93 a share and then once it clears more near-term overhead resistance at $22.03 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 758,450 shares. If that breakout starts post-earnings, then HLSS will set up to re-test or possibly take out its next major overhead resistance levels at $24 to its 52-week high at $25.59 a share. Any high-volume move above those levels will then give HLSS a chance to tag $30 a share.

I would avoid HLSS or look for short-biased trades if after earnings it fails to trigger that breakout and then drops back below some key near-term support levels at its 50-day moving average of $20.94 a share to more near-term support at $20.90 a share with high volume. If we get that move, then HLSS will set up to re-test or possibly take out its next major support level at its 52-week low of $19.47 a share.

Select Comfort

Another earnings short-squeeze prospect is sleep solutions services provider Select Comfort (SCSS), which is set to release numbers on Thursday after the market close. Wall Street analysts, on average, expect Select Comfort to report revenue of $274.27 million on earnings of 32 cents per share.

>>5 Ways to Profit From a Crowded Short Trade

The current short interest as a percentage of the float for Select Comfort is pretty high at 7.8%. That means that out of the 53.57 million shares in the tradable float, 4.20 million shares are sold short by the bears. This is a decent short interest on a stock with a relatively low tradable float. Any bullish earnings news could easily spark a sharp short-covering rally for shares of SCSS post-earnings.

From a technical perspective, SCSS is currently trending below both its 50-day and 200-day moving averages, which is bearish. This stock has been consolidating and trending sideways for the last two months and change, with shares moving between $16.51 on the downside and $18.60 on the upside. A high-volume move above the upper-end of its recent range post-earnings could easily trigger a big breakout trade for shares of SCSS.

If you're bullish on SCSS, then I would wait until after its report and look for long-biased trades if this stock manages to break out above some key near-term overhead resistance levels at $17.96 a share to $18.60 to $18.66 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 992,268 shares. If that breakout hits post-earnings, then SCSS will set up to re-fill its previous gap-down-day zone from January that started just above $21 a share. If that gap gets filled with strong upside volume flows, then SCSS could easily tag another gap high of $24 a share.

I would simply avoid SCSS or look for short-biased trades if after earnings it fails to trigger that breakout and then drops below some key near-term support levels at $16.79 to $16.61 a share with high volume. If we get that move, then SCSS will set up to re-test or possibly take out its next major support level at its 52-week low of $15.31 a share.

Linear Technology

My final earnings short-squeeze play is semiconductor player Linear Technology (LLTC), which is set to release numbers on Tuesday after the market close. Wall Street analysts, on average, expect Linear Technology to report revenue of $350.01 million on earnings of 48 cents per share.

>>5 Big Trades to Survive a Roller Coaster Market

The current short interest as a percentage of the float for Linear Technology stands at 4.4%. That means that out of the 233.16 million shares in the tradable float, 10.29 million shares are sold short by the bears. If the bulls get the earnings news they're looking for, then shares of LLTC could easily jump sharply higher post-earnings as the bears rush to cover some of their bets.

From a technical perspective, LLTC is currently trending below both its 50-day and 200-day moving averages, which is bearish. This stock has been downtrending over the last few weeks, with shares moving lower from its high of $51.77 to its recent low of $46.28 a share. During that move, shares of LLTC have been making mostly lower highs and lower lows, which is bearish technical price action. That said, shares of LLTC have for now formed a double bottom at $46.28 to $46.44 a share. If that bottom holds post-earnings, then shares of LLTC could break out and trade higher.

If you're in the bull camp on LLTC, then I would wait until after its report and look for long-biased trades if this stock manages to break out above some near-term overhead resistance levels at $48 to $49.13 a share with high volume. Look for volume on that move that hits near or above its three-month average volume of 2.71 million shares. If that breakout hits, then LLTC will set up to re-test or possibly take out its 52-week high at $51.77 a share. Any high-volume move above that level will then give LLTC a chance to tag $55 to $60 a share.

I would avoid LLTC or look for short-biased trades if after earnings it fails to trigger that breakout, and then drops back below that double bottom support zone at $46.44 to $46.28 a share with high volume. If we get that move, then LLTC will set up to re-test or possibly take out its next major support level at its 200-day moving average of $42.35 a share to $40 a share.

To see more potential earnings short squeeze plays, check out the Earnings Short-Squeeze Plays portfolio on Stockpickr.

-- Written by Roberto Pedone in Delafield, Wis.

RELATED LINKS:

>>5 REIT Trades Worth Buying in April

>>5 Stocks Under $10 Set to Soar

>>3 Big-Volume Stocks in Breakout Territory

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.

Bernstein Upgrades Citi To Buy Amid ‘Increasing Confidence’ In Its Execution

Citigroup (C) was gaining ground again Tuesday, following its Monday rally on better-than-expected first-quarter earnings, thanks to an upgrade from Sanford Bernstein.

Analyst John McDonald and his team upped their rating on the stock to Outperform from Market Perform, and increased their target price by $5 to $57. They write that the move comes as they have increased confidence in Citi's ability to improve core efficiency and get on track to achieve a 0.9% return on assets—and on their belief that the firm has addressed the Fed's concerns, which puts it on the path to increasing the amount of cash it returns to shareholders.

They note that investors will need some patience to see all this happen, but see downside limited by growing book value and the company’s modest valuation. They applaud Citi's upbeat first-quarter, which they believe demonstrated "progress on core expense controls, largely stable credit (ex-known items in Mexico), and continued growth in capital levels and book value per share."

Read more highlights from the note below:

Credit costs decline sequentially on lower losses and steady reserve release. Citigroup’s provision declined by ~$100m q/q to $1.97b due to a decline in net charge-offs by roughly the same amount, as reserve release remained flattish to slightly up vs. last quarter. Adjusting for charges in 1Q related to the  PEMEX Mexico supplier fraud and a 4Q change in loss treatments at CitiFinancial and Mortgage, NCOs declined 4% q/q to $2.28b mostly on improved mortgage losses in Holdings, while Citicorp losses increased slightly on LatAm portfolio growth and seasoning. Consolidated net reserve releases of $646m remained steady q/q, with Citicorp’s net reserve release of $320m coming in bigger than expected on a ~$200m release from N.A. consumer (card). Looking ahead, we model some additional room for consolidated NCOs to fall further, driven by US mortgages, partially offset by seasoning in International consumer. However, we model all-in provision expense to increase modestly ahead as reserve releases in US card and mortgage tail off. We have total reserve release shrinking from $646m in 1Q to $422m in 2Q and down to $179m by 4Q14.

Continuing to build capital and book value, and consume DTA. The company’s Basel III capital grew 30bps sequentially to 10.4%, as a $6.3b build in Basel III capital more than offset $27b of RWA growth. Citi reduced its DTA by ~$1.1b in the quarter, providing further proof that this asset can consistently help build regulatory capital. The company also reported strong growth in its Basel III supplemental leverage ratio, which was up 20bps sequentially to 5.6%, well above the 5.0% proposed regulatory minimum for 2018. Management estimates that the adoption of the Fed’s recently announced SLR rules would have a flat to modestly positive impact on the 5.6% ratio. Citi’s TBV grew ~2% in the quarter from $55.31 to $56.40 and we model tangible book value to end 2014 at $60.50 and 2015 at $66.52.

Management declares CCAR issues fixable, and sets its sights on 2015 return. Management indicated, based on its initial discussions with the Fed, that the regulator’s rejection of Citi’s 2014 capital plan is neither a reflection of a problem with its business model nor its ability to generate capital, but relates more to deficiencies in Citi’s models and processes around stress testing. As expected, the company could not comment further on the precise details of what it needs to fix, as it has not received the detailed written feedback from the Fed explaining its rejection and it is currently engaged in an ongoing confidential dialogue with its regulators. That being said, management did note that it is focusing 100% of its attention on getting the right people, processes and models in place to create a permanent, “industrial strength” solution that will lay the groundwork for many years of capital return, beginning with its 2015 submission. We continue to model for the company to maintain its current $0.01 per quarter dividend and its annual buyback run-rate of $1.2b through CCAR year 2014 (i.e. until 1Q15) and then ramp up capital return to $6b in share repurchases and a $0.12 per quarter dividend in CCAR year 2015, representing a ~9% dividend payout ratio and a ~40% total payout ratio.

This is a "Right Time, Right Product" E-Cig Name (LO, AHII, MO, RAI, ITYBY)

The winds of change are blowing in the cigarette arena, and though in a superficial sense it looks like the usual big tobacco names such as Reynolds American, Inc. (NYSE:RAI) or Lorillard Inc. (NYSE:LO) are positioning to retain their dominance in the new era of cigarette smoking, in reality, it's a little name like American Heritage International Inc. (OTCBB:AHII) that could end up beating the big guys at their own game.

The new smoking battleground is electronic cigarettes, or e-cigs, for short. Last year could be considered a breakout year for e-cigs, with sales of them reaching a little over $1 billion. Citigroup expects sales of e-cigs to exceed $3 billion this year, however, suggesting the industry has yet to reach its critical mass.

No, it's barely a drop in the bucket compared to the $100 billion or so that traditional cigarettes made by Lorillard and Reynolds American see in sales every year, and through the heart of 2012, big tobacco largely dismissed e-cigs, expecting them to be little more than a cute niche, and not expecting electronic cigarette companies like NJOY or American Heritage International to grow into a real threat. What a difference a few months can make, however.

Seeing the writing on the wall, Lorillard Inc. acquired Blu Ecigs (the ones Jenny McCarthy is promoting) in April of 2012. Reynolds American is now wading waist-deep into e-cig waters, launching a nationwide rollout of its Vuse line of electronic cigarettes latte last ear... complete with television ads (the first time in decades cigarettes have been on TV ads, though Blu followed shortly after that). Altria Group Inc. (NYSE:MO) finally got into the game last August with its MarkTen brand... the last of the major U.S. big tobacco names to get into the electronic cigarette game. And, Imperial Tobacco Group PLC (OTCMKTS:ITYBY) is putting the finishing touches on its acquisition of Dragonlite International's e-cig division.

Point being, if there wasn't something game-changing about electronic cigarettes, every single traditional tobacco name wouldn't be getting into the game. The fact that big tobacco - not exactly a group of companies known for innovating or breaking ground or even taking risks - are pushing into the e-cig market speaks volumes about where they're going.

There's just one problem with companies like Altria Group and Reynolds American getting into the electronic cigarette business - for all their marketing know-how and distribution channel muscle, they're not very good at it. That's how a little company like NJOY still controls 40% of the United States electronic cigarette market. Even NJOY, however, may want to look over its shoulder, as nobody is truly entrenched yet. The competition coming on fast is the aforementioned American Heritage International, which brings something unique to the table.... two unique somethings, to be precise.

First, while most e-cigs are made in China, AHII makes its own electronic cigarettes in the United States, where it can control - and see - what goes into them. While there are no known manufacturing issues with Chinese-made electronic cigarettes yet, sourcing them from overseas leaves an enormous amount of opportunity for problems, the biggest of which is toxic ingredients.

Second, though an e-cig is an electronic device, that doesn't necessarily mean consumers want to walk around with what looks like a glowing ball-point pen sticking out of their mouth. American Heritage International e-cigs actually look and feel like traditional cigarettes, giving the company some serious marketing firepower. And, it seems to be an effective idea - AHII sold out of its first production run of electronic cigarettes within just a few weeks.

Bottom line? The e-cig industry hasn't quite made its first gel yet, but we're getting close to that point, and American Heritage International is rapidly but quietly working its way towards the front of the line. Investors who can take a step back and see the bigger picture may want to consider AHII before the gel completely firms up, if not as a long-term play in the electronic cigarette arena, then perhaps as an acquisition candidate as late-to-the-party big tobacco seeks ways to catch up quickly with a stand-out product.

For more on American Heritage, its investor presentation PDF offers the most insight. The corporate website can be found here.

Initial Jobless Claims up 2.9%

Initial jobless claims increased 2.9% to 354,000 for the week ending May 25, according to a Labor Department report released today.

After dropping a revised 5.2% the previous week, analysts had expected initial jobless claims to remain steady at an unrevised 340,000. After initial claims hit an unrevised record low for the recovery in the week ending May 4, these newest numbers suggest that a sustainable downward trend isn't here to stay.

Source: Author, data from Labor Department. 

The four-week moving average also increased in the latest week, up 2% to 347,250.  Although both the latest week's claims and the four-week average increased, each number clocks in solidly below 400,000, a cutoff point that economists consider a sign of an improving labor market.

On a state-by-state basis, three states recorded decreases of more than 1,000 initial claims for the week ended May 18 (most recent available data). Fewer service layoffs dropped California's initial claims a whopping 16,330, while Georgia and Illinois experienced decreases of 1,800 and 1,200 in initial claims, respectively. For the same week, South Carolina and Tennessee registered increases of more than 1,000. Manufacturing layoffs were the primary reason for South Carolina's 1,260-initial-claims increase, while administrative and support service layoffs helped push Tennessee's initial claims up 1,190.

link

5 Great Countries for Minimum-Wage Workers

Raising the minimum wage has become a hot-button issue in the U.S. recently, with President Obama having called for a raise in the federal minimum wage in his 2013 State of the Union address. Many U.S. states have followed suit with proposals of their own to raise their minimum wages, with nearly 20 states already having set wage levels above the $7.25 federal minimum.

When you look around the world, the U.S. ranks among the top countries for its minimum wage. But you can find several countries that pay workers a lot more. Let's look at five of the highest-paying countries for minimum-wage workers, with wages given in U.S. dollar terms using current currency-exchange rates.

Image source courtesy World Atlas.

New Zealand, $11.13 an hour
New Zealand workers are entitled to minimum wages of 13.75 New Zealand dollars an hour. The most recent rise came earlier this year, with a boost of NZ$0.25 coming in February. However, along with that rise came a controversial new "Starting Out" wage program for younger workers, under which those aged 16 to 19 can receive as little as 80% of the adult minimum. Proponents argue that with youth unemployment soaring over 30% in New Zealand, the measure will encourage greater job creation for young workers. Opponents, however, argue that the wage is discriminatory and that similar measures in the past to promote job growth have failed.

Ireland, $11.15 an hour
In Ireland, workers are entitled to 8.65 euros per hour, having been raised from 7.65 euros as of mid-2011. For workers who are under 18, a lower minimum equal to 70% of the full minimum wage applies, while those 18 or older who are in their first or second years of employment can be paid as little as 80% and 90% of the minimum wage, respectively. In addition, lower rates ranging from 75% to 90% apply to workers in approved structured training courses.

France, $12.21 an hour
French minimum-wage workers just got an increase in their pay at the beginning of 2013, with a small rise to 9.43 euros an hour coming after a larger increase in June 2012. The French government said 2.6 million workers would benefit from the higher minimum wage. France ranks among the top countries in the world in terms of worker-pay equality, with the minimum wage representing more than 60% of the median wage across all full-time workers.

Luxembourg, $14.02 an hour
The tiny country nestled between France and Germany pays unskilled workers 10.83 euros an hour, with 16-year-olds entitled to 75% of that amount and 17-year-olds getting 80%. However, for skilled employees, the minimum wage is 20% higher, putting a tangible premium on improving job skills.

Australia, $15.40 an hour
Australia pays full-time adults 15.96 Australian dollars an hour. But there are a wide variety of sub-categories in the minimum-wage laws. For instance, workers under 16 can get paid as little as A$5.87 an hour, with a sliding scale for those ages 16 to 20 that goes from A$7.55 to A$15.59. In addition, apprenticeships have special amounts, ranging from A$10.22 in the first year to A$17.65 in the fourth year.

What national minimum wages mean for investors
It's important to realize that minimum-wage laws affect companies only to the extent of their operations in their home countries. For instance, in Australia, mining giants BHP Billiton (NYSE: BHP  ) and Rio Tinto (NYSE: RIO  ) have to follow minimum-wage laws for their Australian operations, but elsewhere around the world, both companies have faced labor disputes over pay levels that in some cases are much lower than what Australian law would require domestically. Moreover, even as Eaton (NYSE: ETN  ) , Actavis (NYSE: ACT  ) , and other companies have moved or are in the process of moving their corporate headquarters to Ireland, you shouldn't expect a huge shift of employees that would require higher pay.

In addition, wages are only part of the labor cost that companies bear. With countries having different tax rates and social programs and requiring different levels of benefits, you have to look at the entire labor-cost picture to get a true sense of what businesses pay on behalf of their employees.

Nevertheless, in terms of competitiveness, labor costs are a key component of profitability. With every dollar that workers receive taking a dollar of profits away from the bottom line, companies will inexorably seek out places where productivity-adjusted wages are as low as they can find. That makes national minimum-wage legislation an important aspect of preventing a race to the bottom for wage rates worldwide.

Earning as much as you can during your career will help you prepare for retirement. But making the right financial decisions today makes a world of difference in your golden years, and with most people chronically under-saving for retirement, it's clear not enough is being done. Don't make the same mistakes as the masses. Learn about The Shocking Can't-Miss Truth About Your Retirement. It won't cost you a thing, but don't wait, because your free report won't be available forever.