It was up, up, and away for stocks on Tuesday, as the market opened higher and did not look back all day, steadily making advances until the closing bell. The only news out there was holiday retail sales and that bit of bad news did nothing to stop stocks; it just stopped retail and you really can't call that much by looking at the RLX.
At the close, the SP 600 led to the upside with a .9% gain, the DJIA and Nasdaq followed with .5% gains, and the SP 500 rallied .4%. The SP 600 and Nasdaq both bounced off their 50 day moving averages.
Volume was lower by over 20% on the NYSE and the Nasdaq as many players with a lot of money are on vacation for the whole week. Do not expect volume to come anywhere close to the 50 day volume average this week.
Breadth was very good with advancers beating decliners, on both the NYSE and the Nasdaq, by a 2-to-1 margin.
One of the best groups of the day came in the Airlines sector. The IBD Transportation-Airline group rallied 1.4% today and the AMEX Airline index rallied 2.3%. Some leaders in this sector include LFL, UAUA, CPA, RYAAY, and LCC. Funny thing is, I am long 4 out of 5 of those names. You always want to have your money in the leaders. Not the laggards.
The other standouts on today's charts is in the China stocks. My only new long was a China stock and gains in other stocks like CHL, ACH, LFL, and many others show China is where the spotlight is still at.
The laggards on the session was the Retail stocks. The IBD Retail-Clothing group fell 1.2% and the RLX fell .3%. Overall, you can't call that too much damage. But it is where the pocket of weakness was today.
Today was the day after Christmas and a post-Holiday rally should have been expected. This market is supposed to have upside momentum for the rest of the week, since there are not a lot of sellers and it may be easy to bid up some cheap stocks. But a pullback continuation on the indexes would be much better as the low volume would make it a perfect low-volume pullback. Then the volume can come back in after New Year's day and the market can breakout on volume higher than what came on the downtrend.
There is nothing new to add to the commentary that I have not hit upon already in the past five post. This week is going to be slow, drift-less, and should have an upside bias. I am going to play long setups the same way I always play them. Just because it is a low volume environment doesn't mean that if a stock violates a cut loss point that you do not cut your loss. And if a stock breaks out from a nice consolidation pattern on heavy volume, you treat it the same way. Nothing is going to change.
Happy Boxing Day to everyone that celebrates it and Happy Kwanzaa also. Aloha and I will see you at Investors Paradise.
This is the last week for free market commentary, longs, and shorts. Starting January 1st, this blog is done.
New Swing Long: SNDA
Adding To Current Holdings: GRRF CLRT
New Swing Shorts: NONE
Longs Up On The Day (low vol non-IBD excluded): FTEK-44 DECK-27 IHS-95 IIVI-31 STEC-84 TYL-51 AOB-102 ICE-40 HMSY-34 HRT-27 TTEC-63 SEIC-25 DA-52 OMTR-77 GRRF JSDA BTJ AMSF IIG ININ SRSL UAUA LFL GLDN TSRA IWOV VEH RKT RBN IFOX MVSN CACB CTCM CMCSA HEI NU CNH LCC WTS CVLT ASCA LRCX OTEX SMOD EVEP CCO JCG VCLK INAP TMO BMC CELG MAIL ISLN OSIR BMTI CLRT BITI ECMV ISBC BPHX INMD
Stocks On Radar Screen: CHL ICON GSOL FCFS SBGI NCTY CBG MIDD SPI TELN MOCO MVE WEL KKD CBRX USEY
Partial Sells: AW KOG CAM OMNI CKSW ILC TATTF DIVX NMGC
Complete Sells: AFT MFG
3 comments:
Hi Joshua, I love reading your blog everyday but saw that you posted "This is the last week for free market commentary, longs, and shorts. Starting January 1st, this blog is done."
Do you do the same type of commentary and picks at Investors Paradise ?
You do awesome work !
Looking ahead to 2007: Where can investors continue to expect stock market gains?
By Gregory Solomon
Solomon Asset Management, Colorado Springs, CO
Below is a complementary Investment Outlook for 2007 from Solomon Asset Management. We are available to answer all questions.
In the course of 2006, the Dow Jones Industrial Average has gained about 12% and the S&P 500 index is higher by nearly 10%. Institutional investors are expecting that falling oil prices and the pause in interest rate hikes by the Federal Reserve will offset the downturn in the housing market. Their optimism has lifted the Dow Jones average to all-time highs and the S&P index recently posted its best third quarter since 1997. The positive performance of the stock market’s two leading indicators is also setting the stage for several other market indexes to post yearly gains for a fourth consecutive year. Furthermore, since the bear market officially ended in 2002, there are a number industry sectors that have outperformed the both the DJIA and the S&P 500 annually. This is in part, the result of the exceptional gains made by small company stocks, equity real estate holdings and global securities.
As we head into the new-year, any rise in inflation resulting from a rebound in oil will no doubt raise concerns of a slowing economy and may cause the stock market to pull back. Nevertheless, stocks should continue to outperform cash, bonds and real estate. However, with many stocks perched near their multi-year highs, any garden-variety geo-political event could certainly rattle the epileptic nerves of the investment community. Such news may increase the market’s volatility and result in a rotation into more conservative, defensive and large company stocks. Indeed, unlike most market rallies since 2000, large company stocks led the way in the market’s most recent rebound.
Right now, the stock market is four years into a bull market, which started in October 2002. According to the averages, bull markets typically last about five years. Because the market is poised to finish its fourth year in positive territory, odds are, that at the end of next year the market will also be higher. Historically, equities have gained 10 percent in the fifth year of bull market rallies. This scenario would include very little inflation and steady, but still positive, economic growth.
Therefore, in 2007, investors may do well to consider high quality, dividend paying stocks, as well as shares of companies with potential for growth in the global arena. There are still many investment opportunities internationally, where valuations are lower and a weaker U.S. dollar can enhance returns. Additionally, investors should consider mutual funds with exposure to commodities. Though the easy money in this sector is already in the bank, there is still the prospect that both China and India will increase consumption of basic materials as their economies continue to expand. Furthermore, since commodities are not correlated to the U.S. stock market, this strategy provides additional portfolio diversification.
Investors that are willing to take an optimistic view of 2007 may want to consider industries that have historically performed well during sustained periods of economic growth, such as the technology sector. While Wall Street has focused lately on the Dow's new record highs, it might be a surprise to learn that during 2006 technology stocks have actually underperformed the Dow Jones Industrial Average. The tech-heavy NASDAQ 100 index has returned about seven percent through the end of October. Compare that with the DJIA’s 12.7 percent gain. In fact, the NASDAQ index remains more than 50 percent below its all-time peak.
After more than seven years of being out of favor, many technology stocks are trading at attractive valuations. Additionally, this sector is generating significant cash flow, which is now resulting in improved balance sheets with very little debt. Furthermore, some of these companies have even started to pay dividends.
After years of cost cutting, many of largest U.S. companies are sitting on piles of cash and are planning to increase their technology expenditures to increase productivity. Since 2004, IT spending as a percentage of our economy, is gradually improving and is likely to move higher. Therefore, should economic growth in the U.S. begin to slow, the technology sector would be one of the few places where investors can get accelerated growth.
Currently, many large manufacturing companies are buying important new semiconductor products that were not available just two or three years ago. For example, several smaller technology companies now make processor companion computer chips that enhance performance by increasing memory and extending the battery life of components within cell phones, cars and home appliances.
The positive news surrounding the technology sector has recently gotten the attention of Wall Street. Even a number of value-oriented mutual fund managers, who have historically avoided technology stocks, are starting to increase their holdings in the technology sector. According to a recent survey of money managers by the Russell Investment Group, 56 percent are now "bullish" on technology stocks, versus just 18 percent who say they are "bearish" on the sector. As we look ahead to 2007, the investment community appears more optimistic about the technology sector than about any other group except healthcare.
Gregory Solomon is a registered investment advisor and the principle owner of Solomon Asset Management; Colorado Springs, CO. Greg is also a leading investment consultant responsible for the equity research at one of Worth Magazine’s Top 100 Wealth Advisors. For more information on Solomon Asset Management, please visit www.solomonam.com Individual investors can also contact Greg at solomonassetmgt@msn.com
The opinions in the preceding commentary are as of the date of publication, are subject to change based on subsequent developments. This material is not intended to be relied upon as a forecast, research, or investment advice and should not be considered a recommendation to purchase or sell securities.
Copyright © 2006 by Solomon Asset Management All rights reserved
Mark, The commentary is always posted in the "Daily market Analysis" section in IP. This part will cost $30 a month during the first year.
The longs and shorts I list I post the charts and the ENTIRE reason for the trade and where to cut the losses. That will be $60 a month during the first year.
The chat room and forums where people ask me questions all day long is $100 a month.
My mentor Joe "Seoul Joe" Park charges $1000 a month
RevShark who asked ME to partner with him before he started his new site charges $500 a month for his full services.
So I am at a bargain price. Next year the price will go up.
Thank you for the kind words. :)
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