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Market Shadows: Group of writers and investors: Paul Price, Lee Adler, and Ilene.
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  • Sabrient's What the Market Wants 1 comment
    Jun 14, 2010 10:11 PM | about stocks: NTAP, SLW, NFLX, AAL

    Here's the latest "What the Market Wants" from Sabrient's David Brown. Check out more of Sabrient's investment resources here.  - Ilene 

     Sabrient Systems

    June 14, 2010

    Support Holds . . . But So Does Resistance
      
    by David Brown
    Chief Market Strategist, Sabrient SystemsLLC

    Since August 2009, with the exception of roughly nine weeks, the S&P 500 has stayed between strong support at 1040 and strong resistance at 1114, and it has been trapped in that range once again for the past month. Earlier today it was close again to testing resistance at 1114, but alas, it failed to break through and dropped back to 1089.

    This is likely due partially to the mixed nature of last week’s economic reports.  We had generally weaker-than-expected numbers for pure consumer credit and retail sales, but those were partially offset by a second consecutive week of improvement in initial jobless claims.

    The uncertain global picture has stabilized somewhat with some improvement in BP’s handling of the oil spill and considerable stabilization of the euro from its position a few weeks ago.Also, China’s growth seems more certain than a few weeks ago. But mid-session today, there was news that Moody’s had downgraded Greece’s debt rating, and the S&P 500 seemed to lose its resolve to penetrate its 200-day moving average and slipped all the way back to 1089, ending the day with a -0.18% loss. 

    On the corporate front, reports are now few and far between but those we’ve seen have still been generally equal to or better than expectations. So we’re now faced with a decent corporate earnings picture domestically, but the muddled international picture is keeping the S&P 500 trapped between 1040 and 1114 and below its 200-day MA.

    Cap/Styles & Sectors. The past week was extremely volatile, but in the end, the cap-styles settled for a small gain, led by Micro-caps (+3%), with the worst performance turned in by Large-cap Growth (+1.95%).  Interestingly, the Cap-Style table reveals that Mid-caps have now led the past week, month, 3 months and 12 months.  Value eked out a slight gain over Growth for most of that period and dominated in each cap-style last week.

    Sector performance last week was very close to what we had forecast, with Materials and Energy in two of the top three spots.  Financials did not fare as well as we expected, due to continued rumors regarding Wall Street reform.  Consumer Discretionary and Consumer Staples were at the bottom as expected.  If there was any surprise at all, it was that Technology finished dead last for the week, as the higher valuations in that sector were shunned by worried investors.  We would expect Technology to do better in the weeks ahead. It is #5 in our forward-looking rankings, while Financials, Materials and Energy continue to be projected leaders by our forward-looking system.

    Summer Doldrums.  We are now in the dog days of summer. The upcoming week offers sparse economic data, with the CPI and PPI reporting midweek and the LEI and industrial production coming in late in the week. The likelihood of major corporate announcements is slight, since we are nearing the end of Q2.

    During this likely “quiet period,” you should look for bargains created by the recent market weakness. Continue to hedge your portfolio and take profits on overvalued positions.  (For some insight on a hedged portfolio, you might want to check out the Sabrient Investor’s (NYSE:H)Edge portfolio here.) 

    4 Stock Ideas for This Market

    This week, I started with Sabrient’s High Growth preset search on MyStockFinder (http://MyStockFinder.com). Then, I narrowed it down to Mid and Large Caps and slightly upweighted Technicals. Here are 4 new stock ideas from a variety of sectors:

    NetApp (Nasdaq: NTAP) – InfoTech
    Silver Wheaton (NYSE: SLW) – Materials
    Netflix (Nasdaq: NFLX) – Consumer Discretionary
    U.S. Airways (NYSE: LCC) – Industrials

    Until next week,

    David Brown
    Chief Market Strategist
    Sabrient Systems, LLC 
    Leaders in Investment Research
    http://www.sabrient.com 

     

    Full disclosure:  The author does not hold any of the stocks mentioned in this week’s “Stock Ideas.”

    About This Newsletter

    Our goal in this newsletter is to use Sabrient’s quantitative methodology to provide the best hunting ground for styles, caps, and sectors for both longs and shorts – and to provide guidance in areas where you may want to be cautious versus aggressive in your portfolio. In the very near future, we will be using our FSYS platform to produce a look-ahead for the next 1 to 3 months of the most likely performance expected from these styles and caps.

    Sabrient Systems is an independent equity research firm founded in December 2000 and headquartered in Santa Barbara, California.  Sabrient helps clients enhance performance and contain risk by providing unbiased, fundamentals-based, quantitative research for nearly 6,000 stocks, indices and ETFs.  
    Stocks: NTAP, SLW, NFLX, AAL
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  • joey554
    , contributor
    Comments (605) | Send Message
     
    Netflix is extremely overvalued it should come back down to the 30 -40 dollar range
    15 Jun 2010, 10:12 AM Reply Like
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