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Almanac Investor Alert
October Still Frightful 10/25/2007
Weekly Changes
DOW 13671.92 -217.04 -1.56%
S&P500 1514.40 -25.68 -1.67%
NASDAQ 2750.86 -48.45 -1.73%
Well, apparently after nine years of glory Wall Street still fears October. Or more likely, the month’s proximity at the height of earnings season in the beginning of the fourth quarter places it in harms way. Several disappointing earnings results and a week of worrisome economic readings inspired a nasty memoriam on the 20th anniversary of the ’87 Crash.
Last Friday was the worst day since the pummeling on August 9, and on a percentage basis the third worst day of 2007 for the Dow, fourth worst for the S&P 500 and second for NASDAQ behind the February 27 drop. Last Friday’s decline palled in comparison to Black Monday 1987 and the market seems to have stabilized this week. However, the recent pullback has pushed the Dow and S&P below their 50-day moving averages; but not NASDAQ. This is an indicator we are watching closely.
Our bullish call in the October issue and the MACD Buy Signal alert on October 4 both contained words of caution. The housing recession, financial sector earnings and slowing economic readings continue to plague the market. We may look back on current levels as a great buy point but, prudence should be implemented and stop losses heeded.
Two of our ETF positions did close below our stop losses and were closed out of the portfolio: ProShares Ultra Financials (UYG ) and ProShares Ultra Semiconductors (USD) both are currently below our stop loss levels and we will reconsider them as conditions warrant. Freegold Ventures (ITF.TO) has not yet traded at or below our C$1.45 Buy Limit. We continue to recommend patience with ITF. The two non-seasonal ETF recommendations did hit our buy limits and have been added to the portfolio: Market Vectors Nuclear Energy (NLR), Buy Limit $41.50, and PowerShares Dynamic Media (PBS), Buy Limit 16.50.
The rally remains intact but, we are concerned about the elevated level of bullish sentiment. Investors Intelligence bullish % was recently at the euphoric level of 62%, though it just fell back to 56.5%--still high. Volatility is high and the averages are under pressure but are showing support at the aforementioned 50-day moving averages. If this support holds, the rally should resume.
Once again the end of October finds itself at a potential market inflection point. The FOMC meets next on Halloween and they may deliver a trick or a treat. A 25bp cut is baked into the cake; another 50bp cut may rally the market or it may spook it. Inflationary pressures have abated somewhat as gauged by the CPI and PPI, both dubious figures, but $90+ oil and $770+ gold cannot be denied. No cut would send shivers down the collective spine of traders and investors alike. We do give Mr. Bernanke all the credit he is due. His handling of the credit crunch has been nothing short of masterful. He has gained the confidence Wall St. and Main St. and there is a lot to be said for that. But dwellers on both Streets can be a fickle bunch.
STANDARD TRADING GUIDELINES!
BUY LIMITS ARE GOOD TILL CANCELLED.
ALL STOPS EFFECTIVE ONLY WHEN THE STOCK CLOSES BELOW THE STOP PRICE.
ALWAYS SELL HALF ON A DOUBLE.
Please Trade Carefully.
Jeffrey A. Hirsch, Editor
J. Taylor Brown, Director of Research
Stock Trader's Almanac® Almanac Investor Copyright © 2007 Wiley Periodicals, Inc., A Wiley Company.
111 River Street, Hoboken, NJ 07030 Tel: 800-762-2974
Available only to Stock Trader's Almanac® Almanac Investor subscribers. http://www.stocktradersalmanac.com
The October newsletter is now available online for free
http://www.stocktradersalmanac.com/sta/pdf.jsp?id=1052&file=sta_newsletter_1052.pdf
The Week after October options expiration is historically weak.
Average weekly percent changes for the indices from 1980-2005:
DJIA -0.66%
SnP500 -0.64%
NASDAQ -0.66%
Russell 1k -0.65%
Russell 2k -0.78%
"Late October Is Time To Buy Depressed Stocks, Especially Techs And Small Caps"
Page 97
There is an update available
Don’t Be Spooked By October
By Jeffrey A. Hirsch
10/19/07 9:17 am
Twenty years ago last month we issued a timely Sell Signal in our October 1987 issue dated 9/23/87 one month before the Crash. The signal came from the illustrious Dick Stoken, whose research, books and timing we had been following for years. We called on our old friend this month to get an update on his system and to see if it was signaling any ominous tidings. It is not.
Volume 7, Number 3, September 2007
Season of the VIX — Market Cools Off As
Volatility Returns and Volume Spikes
By Jeffrey A. Hirsch
So much for the summer doldrums on
Wall Street this year. Stocks have
retreated as is often the case during this
seasonally weak period, but with much
more fanfare and volume than the garden
variety soft patch. Sub-prime fallout and a
global liquidity crunch have returned fear
to the financial markets, threatening the
prospects of Goldilocks’ survival.
What started out as a hot market in
July cooled rather dramatically after the
July 19 highs. Volume has soared and
volatility has returned. But before we
declare The Street in the clutches of the
bear, let’s review how bad the carnage has
really been.
As our reminder about how hot Julys
often precede selloffs was landing last
month, the market proceeded to turn tail.
At the high the Dow was up 4.4%, but
that gain was quickly erased as the Dow
tumbled 5.6% the last eight trading days
of the month, ending the month down
1.5%.
The Dow suffered the least damage of
all the major indices and is the only
benchmark that has not crossed below its
200-day moving average. This is a testament
to global growth and the earnings
boost the Dow’s multi-national components
receive from the weak dollar when
they repatriate profits.
Despite all the fear and loathing
stirred up by the current correction, the
actual damage has not been that bad. This
pullback may yet become more severe
and turn into a real bear market, but for
now support is holding right around the
200-day MAs, except perhaps for the
small caps, which may be feeling the
credit crunch more painfully.
The Russell 2000 Index of small cap
stocks fell 12.2% from its high and is
negative for the year. R2K is the lone
widely-followed index that has undercut
its March 5 low. The Dow has lost about
8% since its high. After being up 12.3%,
it is now just 3.2% higher for 2007. The
story is much the same for the S&P 500
and NASDAQ. Both are down about
9.5% from their highs and have given
back most of their gains for 2007 with
S&P off 0.8% and NASDAQ up 1.8%.
This current correction is just slightly
more severe than what transpired back in
late February and early March. A failure
to find support around the 200-day MAs
would suggest a further move to the
downside. With the Dow being the last
man standing above this critical level,
we’ll be tracking the old blue chip average
more closely than ever.
Market internals, volume and volatility
are quite a bit different than they were
back in the first quarter. We had the subprime
concerns, market weakness around
the planet, and the unraveling of the yen
carry trade back in February and March.
But now the global liquidity crunch has
gathered momentum and is threatening to
send stocks lower.
The question is whether the market
can fend off the housing slump, an economic
slowdown, inflation, and prevent
the liquidity squeeze from turning into a
run on bonds, stocks and all manner of
financial instruments. Looking at the tape
and internals the situation is less sanguine
now.
http://www.stocktradersalmanac.com/sta/getNewsletters.do
Volume 7, Number 2, August 2007
Looking Forward
The second half of this year may prove to be extremely difficult.
Historically the president in power primes the pump
between the pre-election and election year. Mr. Bush appears to
have little political capital remaining. His own party betrayed
him on immigration, the Democrats are barraging the administration
with subpoenas and inquiries and U.S. public opinion continues
to languish. President Bush’s latest approval rating of 29%
is the lowest of his entire administration, according to the Gallup
Organization. As outlined above, there is significant cause for
concern on the Street both domestically and geopolitically.
Year-to-date the Dow is up 11.6%, the S&P 9.5% and NASDAQ
performing best tacked on 12.1%. The market seems ripe
for at least some sort of pullback. A 10% retrenchment would
put the averages in the neighborhood of Dow 12,500, S&P 1400
and NASDAQ 2450. Even a 20% bear market would barely
make a dent.
The good news is that there is potential for a rapid and significant
recovery. Historically after the markets are bruised in post-war
inflationary environments they have surged over 500% following
the other major wars in the last 100 years (see June 2007, January
2006 and February 2005 issues). The timing and magnitude of that
next rally is too far off to accurately predict, but the sooner we win,
lose or draw the Iraq conflict, the sooner we can get back to the
business of being the biggest and best market in the world.
http://www.stocktradersalmanac.com/sta/pdf.jsp?id=1033&file=sta_newsletter_1033.pdf
Aug 19 2007
Season of the VIX — Market Cools Off As Volatility Returns and Volume Spikes
#msg-22346862
Almanac Investor Alert
Cracks in the Foundation 7/26/2007
Weekly Changes
DOW 13473.57 -526.84 -3.76%
S&P500 1482.66 -70.42 -4.53%
NASDAQ 2599.34 -120.70 -4.44%
Today’s market action corroborates our call last in Thursday’s email that the close of Dow 14000.41 represents at least a short term top in the stock market. We believe that the balance of the summer will prove to be a difficult environment for most equities. Almanac Investors are out of the market with respect to our MACD sell signals. Exposure to stocks is protected on the downside with fairly tight stop losses, a position in the Prudent Bear Fund (BEARX) and new buying is limited to a few select positions in mostly energy and precious metals. If you do not have down side protection as we have been advising, it is prudent to employ it immediately.
There is a cacophony of negative forces in play at the moment; most of which we have documented in this space. The “sub-prime homesick blues”, stealth inflation eroding the foundation of the economy, geopolitical distress, domestic strife, spiraling energy prices, the dismal dollar, a burgeoning trade war with China et al, are real concerns despite the quixotic spin from the talking heads that all is well. With all due respect to many of our well regarded colleagues, Goldilocks has not been anointed Empresses of the economy for life.
The time for warnings are over. As we stated in last month’s issue in the ETF Corner: Cracks in the Foundation? “It is possible that there is just too much blood letting in too many sectors for the stock market to shrug off this time…. recent market action smacks of at least a short-term top. ”
History dictates that the market will now, in all likelihood, retrench to its 200-day moving average. That puts it at or about 12750, about 9% lower than July 12th high. (See the July Proving Grounds for the complete analysis). After that, the market will find itself at a crossroads. It will either find support, pullback into a 10-20% correction or decay into a full-fledged bear market. We employ the Ned Davis Research definition of a bear market as either a 30% decline after 50 calendar days (Dow 9800) or a 13% drop after 145 days (Dow 12180). The severity of the bear, should it come to fruition, will be partially dictated by exogenous forces.
The longer term direction of the stock market will be influenced heavily by General Petraeus’ assessment of the Iraq situation in September. Remember, a basic tenant of our analysis is that the nonrecurring pattern that holds the greatest influence on the stock market is War. Positive developments in Iraq will bode well for The Street. A negative report will not be beneficial, but it may bring the conflict closer to some form of resolution. Either way, indecision and uncertainty are The Street’s worst enemies. So between now and the general’s September testimony, the specter of ambiguity is likely to quell any meaningful rally. Congress has mandated the general’s testimony be given no later than September 15. Some hemming and hawing about more time has already begun. Further delays on delivery of this report may foster additional uncertainty.
Of immediate concern, not to add kerosene to the fire, is tomorrow’s GDP report. Moody’s Economy.com forecasts 3.5% and lists a consensus estimate of 3.2%. If the primary measure of production and consumption for the U.S. falls short, look out below. And it doesn’t stop there. There is a lot of potentially bad news heading down the pike right now. If you have followed our advice over the past few months you are covered. You even have some big winners in the ETF portfolio.
The stuff has hit the fan. We have been worried about this market for some time. It turns out that at least for now our concerns are validated. Having been here before the best course of action is to batten down the hatches and don’t panic. Take profits if you have them and start looking for an entry point.
STANDARD TRADING GUIDELINES!
BUY LIMITS ARE GOOD TILL CANCELED.
ALL STOPS EFFECTIVE ONLY WHEN THE STOCK CLOSES BELOW THE STOP PRICE.
ALWAYS SELL HALF ON A DOUBLE.
Please Trade Carefully.
Jeffrey A. Hirsch, Editor
J. Taylor Brown, Director of Research
Total returns results
In percentages, based on $US
Periods less than 1 year are cumulative, unless otherwise
noted.
Index Name 01/01/2007 through 01/31/2007
Broad-Market Indexes
Russell 3000® Index 1.90
Russell 3000® Growth Index 2.51
Russell 3000® Value Index 1.30
Russell 3000E™ Index 1.91
Large-Cap Indexes
Russell 1000® Index 1.93
Russell 1000® Growth Index 2.57
Russell 1000® Value Index 1.28
Russell Top 200® Index 1.35
Russell Top 200® Growth Index 2.10
Russell Top 200® Value Index 0.62
Russell Top 50™ Index 0.77
Mid-Cap Indexes
Russell Midcap® Index 3.38
Russell Midcap® Growth Index 3.64
Russell Midcap® Value Index 3.08
Small-Cap Indexes
Russell 2000® Index 1.67
Russell 2000® Growth Index 1.86
Russell 2000® Value Index 1.50
Russell 2500™ Index 2.70
Russell 2500™ Growth Index 3.18
Russell 2500™ Value Index 2.23
Russell Small Cap Completeness Index™ 3.38
Russell Small Cap Completeness Growth Index™ 4.12
Russell Small Cap Completeness Value Index™ 2.54
Russell Microcap™ Index 1.28
Russell Microcap™ Growth Index 1.64
Russell Microcap™ Value Index 0.94
'January Barometer' bodes well for 2007
Posted 1/31/2007 10:53 PM ET
By Adam Shell, USA TODAY
NEW YORK — If January lives up to its reputation as a good predictor of future stock market performance, then 2007 is likely to be another profitable year for stock investors.
Stocks rallied sharply on January's final day of trading Wednesday, bolstered by a statement released by the Federal Reserve that alleviated inflation fears and noted the economy was in solid shape.
The benchmark Standard & Poor's 500-stock index gained 9.42 points to 1438.24, finishing the month up 1.4%.
That positive return bodes well for stocks going forward. The so-called January Barometer, created by Yale Hirsch of the Stock Trader's Almanac, suggests that "as January goes, so goes the market" for the rest of the year. The Almanac says the barometer has registered only five major errors since 1950 and has a 91% accuracy rate.
More important, an analysis by Banc of America Securities shows that a positive return in January increases the odds that the S&P 500 will post gains in the final 11 months of the year. Since 1926, when the S&P 500 was up in January stocks have delivered gains in the February-through-December period 80% of the time.
"Now that the S&P 500 has posted a gain for the first month of 2007 … it may help fuel a trading rally for a few days," noted Tom McManus, strategist at Banc of America Securities.
The Fed's statement was viewed positively by traders because it jibed with Wall Street's preference for a not-too-hot, not-too-cold economy, often referred to as a "Goldilocks economy."
It also helped assuage fears that the central bank would need to start raising short-term interest rates again to cool the economy. In general, higher rates are bad for stocks because they result in higher borrowing costs for consumers and businesses, resulting in a drag on consumer spending and corporate earnings.
"The Fed calmed some fears," says Todd Leone, head of trading at Cowen & Co. "People were concerned that the Fed would have to raise rates again. But now it looks like going forward the Fed will stand pat. And that is a positive."
Investors who favor blue-chip stocks apparently liked what the Fed had to say. The Dow Jones industrial average rallied more than 98 points to 12,621.69. If it had closed just another 0.09 points higher, the Dow would have topped its all-time closing high a week earlier and notched its 27th record since the end of September.
The January Barometer has earned a strong following throughout the years due to its accuracy.
"Stock market historians love the statistics and seasonal patterns of historical returns because they believe the calendar cycles tend to repeat themselves in a predictable way based on factors such as politics, investor psychology, money flows and taxes," McManus wrote in a report to clients Wednesday.
But history aside, not everybody on Wall Street is convinced the market's performance in January has any bearing on what happens the rest of the year.
"It has little predictive power," writes Ken Fisher in his new book, The Only Three Questions That Count: Investing by Knowing What Others Don't.
Find this article at:
http://www.usatoday.com/money/markets/us/2007-01-31-mart-usat_x.htm?csp=34
January 19th:
"January Expiration Day Dow Down 7 of Last 8 With Big Losses"
Naz is on average bullish Tue 16 and Wed 17
'January Barometer'
In 1972 market historian Yale Hirsch coined the phrase, "As January goes, so goes the year." Stats back up his catchy slogan: In 44 of the past 55 Januarys since 1950, the S&P 500's year-end finish mirrored how it fared in the first month of the year, says Hirsch's Stock Trader's Almanac.
Page 15, 2007 Stock Trader's Almanac
I wonder if there is any coincidence that Hirsch put this on the day after the "January First Five Days 'Early Warning' System"
Tuesday January 9, 2007:
Big money is made in the stock market by being on the right side of major moves.
I don't believe in swimming against the tide.
- Martin Zweig
January's First Five Days "Early Warning" System (This is based on the SnP 500)
"The last 35 First Five Days were followed by full-year gains 30 times for an 85.7% accuracy ratio and a 13.7% average gain all 35 years..."
Page 14, January 2007 Edition page 14
Biotechs, Semis & Truckers Lead Nasdaq to Jan Effect Gain
Thursday , January 04, 2007 13:47ET
The blue chips (Dow -45) are lower, but for the second session the Nasdaq (+0.5%) is outperforming in classic "January effect" trading. January is the best month of the year for the tech-heavy index, averaging a 3.7% gain according to the "Stock Trader's Almanac". The January effect is based on a tendency for year end losers to rebound in the new year. That is certainly the case with the biotechs (BBH +2.1%) and semis (SOX +0.9%) which were losers in 2006. Truckers (+1.7%) tumbled 21% from their July 3 peak. eBay (EBAY +3.3%) was also a big laggard last year. Commodity and Consumer sector names are mostly lower. The Dow laggards are MCD, XOM, T, AA and DD.
ECONOMY
Jobless Claims: +10K; +1K expected
Dec ISM Non-Mfg Index: 57.1; 57.5 exp; 58.9 in Nov
Nov Factory Orders: +0.9%; +1.3% exp; -4.5% (rev from -4.7%) in Oct
Nov Pending Home Sales: -0.5% M/M; -11.4% Y/Y; -1.7% M/M in Oct
Weekly EIA oil stocks (-1.3M bbl): +930,000 bbls exp; -8.1M bbls prior week
Weekly EIA gasoline: +5.6M bbl; +1.1M bbls exp; +3M bbls prior week
Weekly EIA distillates: +2.0M bbl; +1.08M bbls exp; +500,000 bbls prior week
MATERIALS
(-) Gold: Gold miners (XAU -1.5%) are laggards in the materials sector as the market settles down from its whipsaw trading on Wednesday. Gold is down modestly (-$1.20) but silver is trading highher.
Specialty Chemicals:
(-) ASH: Ashland was cut to Mkt Perform from OUtperform at William Blair.
Copper:
(-) PCU: Southern Copper is Bear Stearns' top pick among copper miners.
CONSUMER CYCLICALS
+ Apparel Retailers: Shares have run into elevated expectations. Several retailers warned.
++ ARO (52-wk high): Aeropostale upped its Q4 non-GAAP EPS view by 2c to 91-93c.
++ ZUMZ: Zumiez Dec comps +11.5% vs. the +6.5% FC est.
+ GES (52-wk high): Guess Dec comps +9.6%, above the 5% consensus.
+ JOSB: Jos A Bank Dec Comps +1.4%; Ryan Beck upped JOSB to Outperform from Mkt Perform. Price tgt lifted to $39 from $33.
+ MW: Men's Wearhouse backed its Q4 EPS view of 72-76c, in line.
+ ANF: Dec comps (-1%)
+ CHS: Chico's FAS Dec comps (-2%), Sees Q4 EPS of 12-15c, WELL BELOW the 21c estimate.
(-) AEOS: Dec Comps +13%; Q4 EPS guidance boosted by 1c to 64-65c, but Reuters mean estimate was 66c.
(-) GPS: Gap Dec comps (-4%)
(-) CTR: Cato comps (-6%); Sees 34-36c in Q4, WELL BELOW the 43c Reuters mean estimate.
(-) HOTT (-20%): Dec comps (-5.1%); WARNS Q4 EPS seen at 20-22c, down from prior 33-38c guidance.
(-) LTD: Dec comps +4%, below the high single digit guidance
(-) PLCE: Children's Place Dec comps +5%, BELOW the 8.2% consensus.
(-) WLSN: Dec comps (-23.1%)
(-) CTRN: CitiTrends Dec comps (-0.1%)
(-) WTSLA: Wet Seal Dec comps +1.3%
Dept Stores:
+ JWN (52-wk high): Nordstrom Dec comps +9% doubling the 4.3% consensus.
+ SKS: Saks Dec comps +11.1%, double the 5.3% FC estimate.
-- BONT: For Carson's and Bon-Ton combined, Dec comps were +0.3%.
-- FD: Dec comps +4.4%, sees Jan comps up 1.5% to 3%.
Broadline Retailers:
+ COST: Dec comps +9%
+ DG: Dollar General Dec comps +7.1%, above the 3.9% consensus.
-- TGT: Dec comps +4.1%, +4.5% expected
+ WMT: Wal-Mart Dec comps +1.6% (in-line); WMT sees January comps at +1-2%, affirmed quarterly earnings guidance.
Specialty Retailers:
(-) HVT: Haverty Furniture Dec comps (-9.2%).
(-) ODP: Office Depot was cut to Mkt Perform from Outperform at William Blair.
(-) ZLC: Dec comps +2.3%, Zales WARNED its sees Q2 EPS of $1.85-1.90 (excl derivatives), this is below the $2.19 Reuters mean estimate. Comps +1.5% in Dec.
(-) Hotels: Thomas Weisel downgraded Hilton (HLT), Starwood (HOT) and Marriott (MAR) to Underweight from Market Weight citing high expectations and deteriorating fundamentals.
Media/Broadcasters:
-- TWX: The NY Times reported Warner Brothers plans to announce next week a videodisc that can play videos in both Blu-ray and HD-DVD formats.
Restaurants:
+ RUTH: Ruth's Chris Steak House (RUTH) reported a preliminary Q4 revenue expectation of $83.8 and $84.0 million, ABOVE the $82.7 million Reuters mean estimate. Dec sales comps were up 7.4%. RUTH is Bank of America's top small cap pick for 2007.
+ PNRA: Panera Bread reported Q4 revenue rose 25% to $233 million, above the $230.7 million Reuters mean estimate.
(-) MCD: McDonald's is the Dow laggard at mid-session, and is 2 sessions removed from its latest high.
CONSUMER STAPLES
+ Tobacco:
+ MO: Altria is Jim Cramer's (CNBC TV) #1 value stock for 2007. He sees the long awaited corporate breakup adding 30 points for MO shareholders.
Food Products:
(-) KFT: Bank of America cut Kraft Foods to Neutral from Buy, $36 tgt.
-- Soft Drinks: Bear Stearns downgraded the US beverage industry to Market Underweight from Market Overweight. The firm says defensive rotation into the group is over. However, Bear retained its Outperform ratings for Pepsi (PEP), Coca-Cola (KO) and Pepsi Bottling Group (PBG).
Services:
-- JTX: CIBC any Jackson Hewitt weakness to the low 30's is a buying opportunity.
-- Alcohol:
(-) STZ (-11%): Constellation Brands (STZ) missed and warned. For Q3 STZ reported 58c vs. 52c (non-GAAP) on inline revenue, missing the 60c consensus estimate. For the fiscal year ending February, STZ revised its fiscal 2007 comparable basis diluted EPS outlook to $1.65 to $1.70 from the company's previous estimate of $1.72 to $1.76. Consensus estimate is $1.75.
(-) BUD, SAM, TAP: Brewers are also trading lower.
Consumer Nondurables: Bank of America reiterated its buy rating on Kimberly Clark (KMB) and Procter & Gamble (PG). Both are just off their 52-week highs. Procter & Gamble (P&G) is seen exploring a broad-based alliance with the Bangalore-based health sciences company, Sami Labs, for new product innovations in the cosmetics space. (The Economic Times, India)
ENERGY
Crude oil (-$1.66 to $56.66) and natural gas (+12c/MMBtu) are moving in opposite directions. Unleaded gasoline is 4c/gal lower on today's report of a surprisingly strong 5.6 million barrel inventory build last week.
(-) Services: Calyon downgraded the oil & gas services industry due to the pressure facing natural gas prices from warmer than normal winter weather.
+ BHI, SLB: Calyon said Baker Hughes and Schlumberger remain Buy rated.
(-) BJS, ESV, WFT: Wachovia cut BJ Services, Ensco and Weatherford to Mkt Perform from Outperform on a trading basis.
(-) E&P: Calyon downgraded the exploration & production industry due to warmer than normal winter weather in the U.S.
(-) APA, APC: Calyon's top picks in the E&P industry, Apache and Anadarko are lower with the sector.
(-) ME: Mariner Energy (ME) was cut to Add from Buy at Calyon.
(-) BEXP: RBC Capital cut Brigham Exploration to Sector Perform from Outperform, tgt to $9 from $12.
(-) Refining: Bear Stearns says margins are declining, but they would add to refining positions opportunistically on the belief a margin rebound is coming in the spring.
+ VLO, SUN: BSC reiterated their Outperform ratings for Valero and Sunoco.
(0) FTO, WNR, TSO: Frontier Oil, Western Refining and Tesoro are rated Peer Perform at Bear Stearns.
(-) Coal:
(-) CNX: Consol Energy was cut to Outperform from Strong Buy at Raymond James.
FINANCIALS
(-) Banks: Credit Suisse upgraded Wachovia Bank on valuation, but reiterated its cautious overall view of the regional bank group.
+ WB: Wachovia was upped to Outperform from Neutral at Credit Suisse, $64 tgt.
(-) SOV: Bear Stearns cut Sovereign Bancorp to Underperform from Peer Perform.
(-) Brokers:
+ GS: Jim Cramer (CNBC TV) called Goldman Sachs its #2 value stock for 2007 (behind MO).
Asset Managers:
+ TROW: T Rowe Price was upped to Outperform from In Line at Fox-Pitt.
(-) LM: Legg Mason was cut to In Line from Outperform at Fox-Pitt.
HEALTH CARE
+ Biotech +2%:
+ MON: Monsanto handily topped the 10c Q1 estimate, reporting 16c vs. 11c on a +1.2% revenue surprise.
+ Big Phrama:
+ MRK: Merck is up for a second day in the wake of its upgrade to Outperform by Bear Stearns.
+ VRX, PFE (up on bad news): The WSJ reported drugs marketed by Pfizer (PFE) and Valeant (VRX), that were once widely used to treat Parkinson's disease, sharply increase the risk of heart-valve damage.
+ Devices: Wachovia upgraded the orthopedics industry to Overweight from Market Weight. The company cited stable pricing, a more positive reimbursement picture, and improved product cycles. Outperform-rated Styker (SYK) and Wright Medical Group (WMGI) are Wachovia's favorite names in the group.
+ ZMH: Wachovia upped Zimmer Holdings to Outperform from Mkt Perform.
Providers:
-- PSYS: Psychiatric Solutions (PSYS) announced the acquisition of Three Rivers Behavioral Health, an 86-bed inpatient psychiatric facility headquartered in Columbia, South Carolina with $12.2 million in 2006 estimated revenue. Terms were not disclosed.
INDUSTRIALS
+ Trucking: On Wednesday the DJ Trucking index soared 4.6% to lead the overall market. Today, Wachovia upped the group to Market Weight from Underweight.
+ CNW, CVTI: Wachovia upped Con-Way (CNW) and Covenant Transport (CVTI) to OUtperform from Mkt Perform.
+ JBHT, ODFL: Wachovia reiterated its Outperform ratings on JB Hunt and Old Dominion.
+ ABFS, HTLD, WERN, XPRSA: Wachovia upped Arkansas Best (ABFS), Heartland Express (HTLD), Werner (WERN) and US Xpress (XPRSA) to Mkt Perform from Underperform.
TECHNOLOGY
+ Semis +1%:
+ INTC/AMD: AG Edwards expects Intel to gain microprocessor share in 2007.
+ LRCX: UBS expects Lam Research will win Intel's silicon etcher business.
+ SIRF: SiRF Tech (SIRF) was started at Outperform by RBC Capital.
+ SIMG: Silicon Image was initiated at Sector Perform by RBC Capital.
(-) MU, MRVL: UBS cut its 2007 PC growth forecast to 12% from 14% due to weaker desktop sales. In a related move target prices for Buy rated Micron (MU) and Marvel (MRVL) were cut to $20 from $22 and $28 from $30 respectively.
Comm Tech: Am Tech is a bull on mobile video technology for 2007. Beginning with the CES nest week where it expects MediaFLO launch announcements next week.
+ QCOM: Am Tech sees Qualcomm benefiting from the growth in mobile video technology above.
-- CSCO: Cisco Systems Inc. (CSCO) agreed to buy IronPort Systems Inc., a network-security start-up, for $830 million in cash and stock. (WSJ)
-- OCPI: Matrix cut Optical Communication Products to Strong Sell from Sell.
Hardware: AG Edwards sees stable host bus adapter (HBA) growth in 2007. The firm also anticipated an increasingly competitive environment for SAN switching. AG Edwards reiterated concerns over Brocade (BRCD) and Emulex Corp (ELX).
+ DELL: Dell will place a shared corporate headquarters in Singapore.
Software:
(-)/+ MANH: Manhattan Assoc (MANH) was cut to Sell from Hold on valuation, $25 tgt, at Cantor Fitzgerald. Think Equity reiterated its positive view of Accumulate-rated MANH.
TELECOM
Wireless Content (China): WR Hambrecht has a dim view of the group due to the leverage wireless carriers have over the content providers. Hambrecht initiated coverage of TOMO & KONG at Sell. LTON and HRAY were started at Hold.
UTILITIES
-/+ DUK: Merrill Lynch cut Duke Energy to Neutral from Buy following the Spectra Energy spin-off. Duke Energy was upped to Outperform from Mkt Perform at BMO Capital who cited valuation.
http://www.knobias.com/story.htm?eid=3.1.82bb7af7f59d36d214f6f40d34931e27d365c3d61eac499308fc44bbc7d...
As a reminder, today marked the second-to-last trading day of the classic year-end Santa Claus rally which, according to the Stock Trader's Almanac, has resulted in an average return of 1.5% for the S&P 500 since 1950. In fact, an influx of new fund inflows that typically hit the market on the first day of trading for the month/quarter/year, as evidenced by the biggest volume in several weeks, provided an additional floor of market support.
Santa Claus is Coming to Town
http://www.thebullandbear.com/articles/2006/1206-santa.html
By Jeffrey Hirsch,
Stock Trader's Almanac Investor
The Santa Claus Rally is scheduled to start on December 22 and run through January 3. We normally experience a brief, yet respectable, rally from the last five trading days of the year through the first two of the New Year. The S&P 500 has averaged a 1.6% gain during this seven-day span since 1969.
It is important to remember that when this reliable seasonality has failed to materialize, it has often been a harbinger of bear markets or sizeable corrections in the coming year. However, years after failed Santa Claus Rallies proved to be times stocks could have been purchased later in the year at much lower prices. Such occasions provide opportunities. Yale Hirsch (founder of The Stock Trader's Almanac) discovered this phenomenon in 1972. We have alerted investors to this ominous portent for decades with the mnemonic device, "If Santa Claus should fail to call: bears may come to Broad & Wall."
This rhyme was certainly on the mark in 2000, as the period suffered a horrendous 4.0% loss. On January 14, 2000, the Dow started its 33-month 37.8% slide to the October 2002 midterm election year bottom. Nasdaq cracked eight weeks later falling 37.3% in ten weeks, eventually dropping 77.9% by October 2002. Saddam Hussein's invasion of Kuwait cancelled 1990's Santa Claus Rally. Three days later, on January 9, 1991, the S&P 500 had dropped 3% one week before the onslaught of Gulf War I. This created a triple bottom.
Energy prices and Middle East terror woes may have grounded Santa in 2004. Corrections and gyrations ensued in early 2005, keeping the averages mixed with a Dow loss and single-digit S&P and Nasdaq gains. Previous absent Santa Claus Rallies in 1979 and 1981 preceded bear market lows in the following years of 1980 and 1982 respectively.
Less bullishness on last day is due to last-minute portfolio restructuring. Pushing gains and losses into the next tax year often affects year's first trading day. This indicator is most effective when confirmed by a down "First Five Days" and a down "January Barometer".
Devised by Yale Hirsch in 1972, our "January Barometer" states that as the S&P goes in January, so goes the year. The indicator has registered only five major errors since 1950 for a 91.1% accuracy ratio.
The last 35 up "First Five Days" were followed by full-year gains 30 times for an 85.7% accuracy ratio and a 13.7% average gain in all 35 years. The 21 down "First Five Days" were followed by 11 up years and 10 down making (less than 50% accurate).
Bullish 4-Year Election Cycle forces have given this indicator a 12-2 record in Pre-Election Years.
Editor's Note: Jeff Hirsch is editor of Stock Trader's Almanac Investor, John Wiley & Sons, 111 River St., Hoboken, NJ 07030, 1 year, 12 issues, $299.
Data courtesy of Stock Trader's Almanac 2007 (Wiley, 0471783773, $34.95) a must-have investment tool with a wealth of information organized in a calendar format. It alerts readers to little-known market patterns and tendencies that help investors forecast market trends with accuracy and confidence. Wiley books are available at your local bookstore or by calling 1-800-225-5945. In Canada, call 1-800-567-4797.
The "Free Lunch" Menu of New Lows is e-mailed to Almanac Investor Subscribers on Wednesday, December 27.
I received my 2007 STA from Amazon today -- nice discount vs. ordering from Wiley & Sons.
Page 116: Sector Seasonality: Selected Percentage Plays
There is a very nice table on page 116. It says that XOI (Amex Oil Index) is in seasonal period from December to June with an average 10-year return of 16.2%
The other indexes featured are:
XNG
RXH
XCI
RXP
MSH
IIX
BTK
XAU
UTY
CMR
DRG
XTC
BXK
XBD
XCI
CYC
S5MATR
RMZ
SOX
DJT
Stock Trader's Almanac page 114:
"If Santa Claus Should Fail to Call
Bears May Come to Broad and Wall
Santa Claus tends to come to Wall Street nearly every year, bringing a short, sweet, respectable rally within the last five days of the year and the first two in January. This has been good for an average 1.6% gain since 1969..."
Page 110 -- "January Effect Now Starts in Mid-December"
Small cap stocks tend to outperform the big caps in January...
2 charts of 27 years worth of seasonal data are on page 110
The Stock Trader's Almanac is generally bearish December 6-14 -- Options expire with a triple witch on Friday December 15
The 100 Most Influential Books
With the holidays fast approaching, I'm often asked which books I recommend for either gifts or for reading while traveling. So, like last year, I recently compiled a list of the top 100 most influential books I've read:
.
A Complete Guide to Technical Trading Tactics by John L. Person
A Short Course in Technical Trading by Perry J. Kaufman
Against the Gods: The Remarkable Story of Risk by Peter L. Bernstein
Beating the Street by Peter Lynch and John Rothchild
Blink: The Power of Thinking Without Thinking by Malcolm Gladwell
Bollinger on Bollinger Bands by John A. Bollinger
China Shakes the World: A Titan's Rise and Troubled Future by James Kynge
Common Stocks and Uncommon Profits by Philip A. Fisher
Contrarian Investment Strategies in the Next Generation by David Dreman
Creating Wealth: Retire in Ten Years by Robert G. Allen
Dave Landry on Swing Trading by Dave Landry
Encyclopedia of Chart Patterns by Thomas Bulkowski
Enhancing Trader Performance by Brett N. Steenbarger
Entries and Exits: Visits to 16 Trading Rooms by Dr. Alexander Elder
Evidence-Based Technical Analysis by David R. Aronson
Financial Fine Print: Uncovering a Company's True Value by Michelle Leder
Financial Freedom Through Electronic Day Trading by Van K. Tharp
Financial Shenanigans: Detect Accounting Gimmicks & Fraud by Howard M. Schilit
Fire Your Stock Analyst by Harry Domash
Fooled by Randomness: The Hidden Role of Chance by Nassim Nicholas Taleb
Fortune's Formula by William Poundstone
Four Steps to Trading Success by John F. Clayburg
Getting Started in Chart Patterns by Thomas Bulkowski
Getting Things Done by David Allen
Good to Great: Why Some Companies Make the Leap and Others Don't by Jim Collins
Hedge Fund Masters by Ari Kiev
Hedgehogging by Barton Biggs
High Probability Trading by Marcel Link
Hot Commodities by Jim Rogers
How Charts Can Help You in the Stock Market by William L. Jiler
How I Made 2,000,000 in the Stock Market by Nicolas Darvas
How to Buy Stocks by Louis Engel
Inside the House of Money by Steven Drobny
Intermarket Analysis: Profiting from Global Market Relationships by John J. Murphy
Investing with Exchange-Traded Funds Made Easy by Marvin Appel
It's When You Sell That Counts by Donald L. Cassidy
Japanese Candlestick Charting Techniques by Steve Nison
John Neff on Investing by John Neff
Liar's Poker: Rising Through the Wreckage on Wall Street by Michael Lewis
Market Wizards by Jack D. Schwager
Mastering the Trade by John F. Carter
Methods of a Wall Street Master by Vic Sperandeo
New Market Timing Techniques by Thomas R. DeMark
Now, Discover Your Strengths by Marcus Buckingham
Option Volatility & Pricing: Advanced Trading Strategies by Sheldon Natenberg
Options for the Stock Investor by James B. Bittman
Options, Futures and Other Derivatives by John C. Hull
Pit Bull: Lessons from Wall Street's Champion Day Trader by Martin Schwartz
Pivot: How One Simple Turn in Attitude Can Lead to Success by Alan R. Zimmerman
Professional Stock Trading: System Design and Automation by Mark R. Conway
Reminences of a Stock Operator by Edwin Lefèvre
Rule #1: The Simple Strategy for Successful Investing by Phil Town
Screening the Market by Marc H. Gerstein
Secrets For Profiting in Bull and Bear Markets by Stan Weinstein
Stock Market Primer by Claude N. Rosenberg
Studies in Tape Reading by Rollo Tape
Sun Tzu on Investing by Curtis Montgomery
Technical Analysis Explained by Martin Pring
Technical Analysis of Stock Trends by Edwards and Magee
The Art of Low Risk Investing by Michael Zahorchak
The Essays of Warren Buffett : Lessons for Corporate America by Warren E. Buffett
The Four Pillars of Investing by William J. Bernstein
The Future for Investors by Jeremy Siegel
The Global-Investor Book of Investing Rules by Philip Jenks and Stephen Eckett
The Inner Game of Tennis by W. Timothy Gallwey
The Intelligent Investor by Benjamin Graham & Jason Zweig
The Master Swing Trader by Alan S. Farley
The Maui Millionaires by Diane Kennedy and David Finkel
The Millionaire Next Door by Thomas J. Stanley
The Misbehavior of Markets by Benoit Mandelbrot and Richard L. Hudson
The Neatest Little Guide to Stock Market Investing by Jason Kelly
The New Market Wizards by Jack D. Schwager
The New Money Masters by John Train
The New Science of Technical Analysis by Thomas R. Demark
The New Trader's Tax Solution by Ted Tesser
The Only Investment Guide You'll Ever Need by Andrew Tobias
The Psychology of Trading: Tools and Techniques by Brett N. Steenbarger
The Secrets of Economic Indicators by Bernard Baumohl
The Single Best Investment: Consistently Creating Wealth by Lowell Miller
The Stock Market Jungle by Michale Panzner
The Stock Trader's Almanac 2007 by Yale Hirsch
The Total Money Makeover: A Proven Plan for Financial Fitness by Dave Ramsey
The Vital Few vs. the Trivial Many by George Muzea
Timing the Market: Using the Yield Curve, TA, and Cultural Indicators by Deborah Weir
Trade Stocks & Commodities by Larry Williams
Trade Your Way to Financial Freedom by Van K. Tharp
Trader Vic II--Principles of Professional Speculation by Victor Sperandeo
Trading Classic Chart Patterns by Thomas Bulkowski
Trading for a Living by Alexander Elder
Trading in the Zone: Master the Market with Confidence by Mark Douglas
Trading Rules by William F. Eng
Trend Following by Michael W. Covel
Trend Trading: Timing Market Tides by Kedrick Brown
Ugly Americans by Ben Mezrich
Unconventional Success by David F. Swensen
Understanding Options by Michael Sincere
Way of Warrior Trader by Richard D. McCall
When to Sell by Justin Mamis and Robert Mamis
Winning on Wall Street by Martin Zweig
Yes, You Can Time The Market by Ben Stein
Earlier this week I also asked readers to let me know if they had read any great books in the past year. Without any measure of doubt, the #1 book recommended by readers (by a large overwhelmingly margin) was Entries & Exits : Visits to 16 Trading Rooms by Dr. Alexander Elder.
Happy reading!
Posted by Kirk at 04:23 PM in Readings | Permalink | Email This
http://www.thekirkreport.com/2006/11/the_100_most_in.html
Stock Traders Almanac 40th Anniversary Dedication in Media
A few of you have written sending word of the dedication in this year's Stock Traders Almanac 40th Anniversary. I was tremendously humbled to have it dedicated to me:
This Fortieth Anniversary Edition is respectfully dedicated to: Barry L. Ritholtz
One of the brightest minds and irreverent voices on Wall Street today, we are honored to consider Barry a colleague and a friend. His adroit commentary is unique in that it is both classical nature and out-of-the-box by design. Ritholtz Capitol Management implements his proprietary Market Timing Model with uncanny accuracy whether long, short or neutral. Barry truly is one Wall Street’s important thinkers and rising stars.
Thanks for the kind words. . . . and to Jeff and Judd . . . (I think these guys asked my mom to write that!)
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well, let us know if you come across again
thanx in advance
I do not know, WB, they may have had something on their web site. But I do not think it was in the STA.
Once, some time ago, I came across someplace on the web where someone posted the STA weekly stock alerts (after the fact, I think). They do issue a weekly subscriber-only email. It may very well have been in one of those.
I hope I come across that place where I saw their emails posted.
Mark Haines with CNBC frequently says he doesn't believe in trading according to a calendar. Poor Mark Haines. I hope he gets over that nasty cough soon. ;)
He has his own book coming out. I wonder if it will be a best seller?
http://www.amazon.ca/CNBC-Profit-Drivers-Strategies-Leaders/dp/0471400645/ref=sr_11_1/701-7544582-16...
http://www.cnbc.com/id/15838129/site/14081545/
Amazon has a nice price, but there may be cheaper places. Wiley's web site is the most expensive way to go.
I use the STA every day. Many people do. You hear about it on CNBC and Bloomberg all the time.
This thread is for discussion of the ideas, tricks, hits, misses and wealth of data that is available from the Hirsch Organization.
I would appreciate timely, on topic discussion.
And I welcome assistant moderator applicants that share my enthusiasm for the STA...
Amazon has the STA on sale -- Send this to someone so that you can receive your copy for the Holidays:
http://www.amazon.com/Stock-Traders-Almanac-2007/dp/0471783773/sr=8-1/qid=1165535850/ref=pd_bbs_sr_1...
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JEFFREY A. HIRSCH is editor-in-chief of the Stock Trader's Almanac and Almanac Investor newsletter. He started with the Hirsch Organization in 1990 as a market analyst and historian under the mentorship of his father Yale Hirsch. He regularly appears on major news networks such as CNBC, CNN and Bloomberg. As well as writing numerous financial columns and is widely quoted in all of the major newspapers and financial publications.
The Stock Trader's Almanac 2009
http://www.stocktradersalmanac.com
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