Technicals still look confusing
Steve Cook on Disciplined Investing

Syndication

Have You Seen This?

News

  • Make money by accessing all our Portfolios, the supporting research and Price Disciplines using our paid subscription blog, Strategic Stock Invetments. Our work is focused on making money for our Portfolios not as some academic exercise in Internet investing. Check our performance (audited)--our Dividend Growth Portfolio has beaten the S&P by 500 basis points per year for the last seven years but with a beta of only .62. (Mandatory Disclaimer: past performance is not a guarantee of future results.) We give you everything you need to duplicate our results, in particular, a strict price discipline for both Buying and Selling.

Have You Seen This?


The Market
    
    Technical

    The indices (DJIA 12479, S&P 1335) were off modestly yesterday; but the technical status of neither changed.  Both closed well within their intermediate term up trend (11950-15370, 1255-1684). The DJIA remains above the upper boundary of its short term trading range (11554-12405); another day or two and its challenge of that boundary will be confirmed.  On the other hand, the S&P has yet to attempt to breach its comparable level (1247-1345).

    Volume fell as did breadth.  The VIX jumped back within its short term trading range; that negates its current challenge and is a mild negative for stocks.

    Gold continued its steady climb within its intermediate term up trend.

    Bottom line: the technical picture remains unclear: (1) DJIA threatening to re-set its short term trading range; the S&P has not even tried, (2) the short term trend is flat, the intermediate term trend is up, (3) the S&P is developing a very symmetrical inverse head and shoulders but hasn’t broken the neck line, the DJIA formed a much less symmetrical comparable formation but it has broken the neckline.  Until the Averages work out of these divergences, I am sitting on my hands.

   Fundamental
      
     Headlines
   

    The one economic number of the day was another unexpected higher housing stat--new home sales were strong on top of an upward revised February report. Investors apparently didn’t care, though I think it quite positive in as much as an improving housing market is a key to a better economy.

    Rather Market attention was on (1) the KMB’s earnings which fell short of expectations due to rising commodity costs.  Of course, this is a single data point and was clearly not reflective of the very positive profit reports from the technology industry last week.  But it was the data point on which investors chose to focus.  I think it meaningless at this point.  (2)  the theme that dominated the time of the chattering class was this week’s Fed meeting which will be followed by the first ever news conference by a Fed chief.  General consensus was that nothing new would come from this event; but everyone seemed obsessed with its importance and will likely continue to do so until it’s over.

    Bottom line: I continue to have a positive outlook on the economy and corporate profits; it is just not as positive as current consensus.  If last quarter’s earnings are better than estimates, I may raise our Year End Fair Value--the operative word being ‘may’.  Even if I do, the end result may not get valuations higher than they are at present which really won’t alter our investment stance.  It will mean that I was too conservative and we missed the latter portion of the recent up trend on about 10% of our Portfolio.

    Update on the ‘beat’ rates:
    http://www.bespokeinvest.com/thinkbig/2011/4/25/sector-beat-rates-this-earnings-season.html
    http://www.bespokeinvest.com/thinkbig/2011/4/25/how-do-top-line-numbers-look.html

 
Economics

   This Week’s Data

    March new home sales rose 11.1% over a revised (up 8%) February number.
    http://www.calculatedriskblog.com/2011/04/new-home-sales-in-march-at-300-thousand.html

   Other

    A reality check from our 1994 experience (long but today’s must read):
    http://www.ritholtz.com/blog/2011/04/is-it-1994-again/

    The rich have gotten richer, but so have the poor (medium):
    http://mjperry.blogspot.com/2011/04/1979-to-2007-rich-got-richer-and-poor.html

    Gold and money supply (short):
    http://scottgrannis.blogspot.com/2011/04/gold-and-commodities-update.html

    Greek deficit worse than expected (short):
    http://www.calculatedriskblog.com/2011/04/greece-budget-deficit-worse-than.html

Politics

  Domestic

Stockman disses both the Obama and Ryan budget plans (long):
http://www.nytimes.com/2011/04/24/opinion/24stockman.html?pagewanted=1&_r=2&ref=opinion

  International

    The IMF drops a bomb (long):
    http://www.marketwatch.com/story/imf-bombshell-age-of-america-about-to-end-2011-04-25?link=MW_home_latest_news










Posted 04-26-2011 8:06 AM by Steve Cook