Daily Gains Letter

Keywords: stock market

Dow Jones Industrials Still Hot; How to Play the Correction

By for Daily Gains Letter | Mar 18, 2013

180313_DL_clarkAction in the stock market is robust. Some economic news has shown improvement, but really, investors are just betting on first-quarter earnings.

The Dow Jones Industrials have been strong, outperforming the other indices and revealing how skittish investors are about the stock market’s advance. Investors are buying Johnson & Johnson (NYSE/JNJ) because it’s safe. When the party ends, Johnson & Johnson is less risky.

Institutional investors are betting on stocks because there really isn’t anywhere else to go. The bond play is over, currencies are too risky, and the commodity price cycle is taking a break. While it does seem unbelievable, the Dow Jones Industrials will likely keep ticking higher before the month is out.

While the action is hard to believe, considering the Main Street economy, the Dow Jones Transportation Average is still plowing ahead, leading the rest of the stock market. Regardless, this is the classic sign of further strength in share prices.

The stock market is not expensively priced, and it’s up to corporate earnings to tick higher, so they we don’t create a bubble. Practically, as a stock market investor, it doesn’t pay to fight the Federal Reserve or the tape. The action is the action; if you want to play the market, “why” doesn’t matter too much.

But if you’re an investor and you own, or would like to own, shares in blue chips like the Dow Jones Industrials, it’s tough to be a buyer when the stock market is at all-time highs.

I wouldn’t buy this market, but when there is a major correction, it will be an interesting opportunity to consider. Of course, … Read More

Retail Sales Up, but Many Retail Stocks Down—What Gives?

By for Daily Gains Letter | Mar 15, 2013

150313_DL_clarkWith the uptick in stock market sentiment and economic news, first-quarter earnings season is increasingly likely to be decent. Already, the earnings reports we’re getting show solid growth, particularly in stocks directly related to consumer spending.

Recently, we saw strong financial growth from Costco Wholesale Corporation (NASDAQ/COST), Cabela’s Incorporated (NYSE/CAB), and Target Corporation (NYSE/TGT). The month of February experienced solid growth in consumer spending and Wal-Mart Stores, Inc. (NYSE/WMT) should see its share price tick back up to its high before it releases its earnings report mid-May.

The Federal Reserve has actually been reporting some positive wealth trends over the last two quarters. If you believe the central bank’s statistics, U.S. household debt in the fourth quarter of 2012 grew at its strongest pace since 2008. The data basically imply a little more confidence. A positive sign for consumer spending, household net worth rose by $1.1 trillion to $66.0 trillion in the fourth quarter; we’re seeing the effects of this now in retail sales figures.

The stock market wants to keep going upward over the near term; it just needs more positive news in order to do so. Statistics from the eurozone continue to be terrible, and Britain’s recent industrial production numbers were exceedingly bad. That county is likely to experience continued recession this year.

The picture in the retail/merchandizing sector of the stock market isn’t uniform. You have Macys, Inc. (NYSE/M) in a steady uptrend, very close to its all-time record high, but J. C. Penney Company, Inc. (NYSE/JCP) is getting killed. Macy’s chart is below:

dl_03152013-image001Chart courtesy of www.StockCharts.com


On the stock market, Sears Holdings Corporation (NASDAQ/SHLD) … Read More