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Dr. Kris has two degrees from MIT because one just wasn't enough. Her life goal was to figure out the universe and having done that (at least to her satisfaction), she decided to tackle something even more difficult—the stock market. Applying the scientific method along with an insatiably... More
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  • Market Notes: Aero & Defense Stocks Attaining Lift-Off -- March 15 2 comments
    Mar 15, 2013 4:41 PM | about stocks: PPA, LLL, ORB, KEYW, PCP, HXL

    4:00 pm ET: The major averages have finally decided to take a step back to digest some of their recent gains. The bears are starting to make their presence known but I don't think they'll be stepping into the drivers seat soon. Why? Well, the VIX is still siding with the bulls and the Dow Transport Index (DTX) remains resilient under pressure. The SPX is closing in on its all-time high of 1576 and a break above that would signal another leg up in the rally. However, a rejection of this level could spell a minor correction. Judging from the previous two consolidation phases in mid-December and mid-February, we could see a 3% cut in the S&P bringing it back to the 1525 level. For this rally to continue, though, we will need to see some consolidation and today's swoon could be the start of it.

    On a side note, a guest on CNBC earlier said that he's projecting 2013 earnings on the S&P to be around $113. Using a conservative P/E ratio of 15 for the index gives a target price of 1695 which is more than 8% above today's level. Using a less conservative but still realistic value of 16 gives a target price of 1800, representing an upside of 15%--yowie! Just some numbers to keep in mind should the S&P break above this critical mark.

    Trading Notes: Aero & defense stocks attaining lift-off
    It appears as if investors believe that sequestration is no big deal, at least when it comes to aerospace and defense contractors. The Powershares Aero & Defense etf (NYSEARCA:PPA) has been in a steady melt-up since last June, gaining over 25% in value. Individual names are also springing to life. Breaking out to new highs today are the following: L-3 Communications (LLL, $81), Orbital Science (ORB, $16), Keyw Holdings (KEYW, $15), Precision Castparts (PCP, $194), and Hexcel (HXL, $30). All of these companies are involved in different areas and I can't really recommend one over the other. Technically, their charts are all very bullish. The "best" chart from a historical perspective belongs to PCP. Since its low of $6 in 2000, the stock has gained an astounding 3100%! Now it may not continue to appreciate at this rate but analysts still really like it giving it a mean recommendation of 1.8 (on a scale of 1.0 being a strong buy and 5.0 being a strong sell). A UBS analyst recently upgraded the stock and the mean analyst price target is $219, about 13% above current levels. Whichever company/companies you choose to invest in, adding one or two of these names would be a great addition to any portfolio, even one that is semi-conservative. Of the above mentioned issues, only L-3 pays a meaningful dividend (2.7%).

    Enjoy your weekend and have a great St. Paddy's Day, begosh & begorrah!

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  • chongkim74
    , contributor
    Comments (745) | Send Message
     
    Bears in process to firmly hold the bulls by the horn…Any info on keyw would be most appreciated. Thanks for your blog.
    7 Apr, 12:25 PM Reply Like
  • Dr. Kris
    , contributor
    Comments (328) | Send Message
     
    Author’s reply » Technically, the outlook for $KEYW is rather grim. It broke support levels at $20, $18, and $16 and appears to be heading to test support at $14. If it breaks under that, then I'm afraid it could easily drop back to key support at $11. Fundamentally, I don't know what its prospects are going forward...

     

    Thanks for reading the blog and taking the time to comment!

     

    Dr. K
    7 Apr, 04:59 PM Reply Like
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  • Metals regaining their luster? $SLV rebounding off of multiyear low & testing $16 resistance. Junior miners ($GDXJ) +20% since 11/5!
    about 10 hours ago
  • Intraday support/resistance: $SPX 2064.75/2074.25, $DTX 917/924, $DJIA 17790/17865, Nasdaq 4750/4775, $RUT 1182.25/1191.75; $VIX 12.35/13.05
    about 12 hours ago
  • Intraday support/resistance: $SPX 2064.8/2070.2, $DTX 910/917.75, $DJIA 17780/17855, Nasdaq 4723.6/4751.4, $RUT 1175/1184; $VIX 12.45/13.05
    1 day ago
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