The revenues-are-key thesis seems to be working
Steve Cook on Disciplined Investing

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Economics

   This Week’s Data

    Weekly mortgage applications fell 5.0% after a couple of big up weeks.

    August business inventories dropped 1.5% versus expectations of a 1.2% decline; business sales rose 1.0% meaning business continue to burn through inventories--a good sign for future production.
    http://econompicdata.blogspot.com/2009/10/good-news-alert-inventories-cliff-dive.html

    The September consumer price index (CPI) rose by 0.2% versus estimates of a 0.1% increase; core CPI was also up 0.2% versus forecasts of up 0.1%.
    http://www.calculatedriskblog.com/2009/10/cpi-owners-equivalent-rent-declines-for.html

    Weekly jobless claims fell 10,000 versus an anticipated rise of 4,000.
    http://www.calculatedriskblog.com/2009/10/weekly-unemployment-claims-decline-to.html

    The October New York Fed index of general business conditions jumped to 34.5 versus expectations of a 17.5 reading and 18.8 recorded in September.
    http://econompicdata.blogspot.com/2009/10/empire-manufacturing-index-roars.html

   Other

    Weak dollar equals strong stock prices, for now (medium):
    http://online.barrons.com/article/SB125547466433083547.html?mod=BOL_hpp_dc

Politics

  Domestic

  International War Against Radical Islam

The Market
    
    Technical

    The DJIA (10015) traded within the up trend off its March 2008 low (9645-11501).  The S&P (1092) resolved the issue of whether it had re-established an up trend or remained in a trading range by blowing through the 1080 level.  The boundaries of the new up trend finished yesterday at 1042-1282. 

    Volume picked up (a positive) and the VIX traded through its most recent low intra day but didn’t quite close below it.  I want to wait for it to close below that low before declaring a new down trend in effect (also a positive). 
    http://mjperry.blogspot.com/2009/10/volatility-index-falls-below-22-to-13.html

    Bullish sentiment high but not at a peak (chart):
    http://bespokeinvest.typepad.com/bespoke/2009/10/bullish-sentiment-high-but-still-below-50.html

    New highs expanding (chart):
    http://bespokeinvest.typepad.com/bespoke/2009/10/new-highs-expand-again.html

   Fundamental
   
    A very clever take on what caused the financial crisis:   
    http://www.nytimes.com/2009/10/14/opinion/14trillin.html?_r=1

      Headlines

    The earnings/revenue reports monopolized the headlines yesterday.  Intel’s report after the close last night coupled with JP Morgan and Abbott today got investors’ juices going. 

Yesterday’s revenue scoreboard: JP Morgan reported better than anticipated profits and revenues; Abbott Labs beat earnings expectations while revenues were up in line with forecasts; Altera profits matched estimates and while sales were down, they were better than anticipated; Grainger reported better profits than forecasts but sales down though in line with estimates; Host Hotels (Marriott) earnings beat expectations, revenues did not.  Xilinx beat both earnings and revenue forecasts.

    While we are only three days into this quarter’s earnings cycle, a pattern is starting to develop.  After a rough start, it appears that, in general, (1) revenues are coming in at or above estimates and (2) investors are responding favorably to those reports.  So our revenues-are-key thesis does seem to have some validity.  To be sure, it is too soon to declare it a reality; but the evidence mounts.

    The Fed did release the minutes from its last meeting; there wasn’t much new unless being even more dovish on monetary policy than conveyed by past statements qualifies.

    





Posted 10-15-2009 8:31 AM by Steve Cook