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Dr. Kris hails from the land o' lakes, beer, bratwurst, and Bucky Badger. She traded in her cheese hat for a propeller beanie and has never looked back. She 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... More
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  • Market Notes: Lockheed-Martin Takes Flight -- July 23 0 comments
    Jul 23, 2013 7:14 PM | about stocks: LMT, PPA, GDX, GDXJ, GLD, IAU, CORN, GRU

    We've been saying that the market has been looking toppy lately and today's plunge in both the market-leading Dow Transport Index (DTX) combined with the continuing fall in the VIX to 12--an extremely contrarian level--is telling us that a correction is imminent. That being said, the fact that Apple (NASDAQ:AAPL) beat earnings estimates (which were low-balled to begin with) could bolster the market tomorrow morning but I think the early morning euphoria will wear away quickly as the bears step in.

    Today's Market Highlights: More of the same
    Today's action was pretty much a continuation of yesterday's moves. Gold bugs should be happy to see the follow-through in yesterday's break-out rally. Even Dennis Gartman came out saying that this is the first time in five years he's bullish on gold and he's recommending buying the gold miners (GDX, GDXJ) over the metal itself (GLD, IAU). The reason is that during the beginning of gold rallies, the miners tend to take the early lead along with offering better returns. (The downside is that they are more volatile.)

    The so-called "soft" commodities can't seem to catch a break. Today the Corn etf (NYSEARCA:CORN) and the Grains etf (NYSEARCA:GRU) both slumped to new yearly lows. Neither one shows any signs of basing but they're worth keeping an eye on because when they do turn around, they can do so with a vengeance. If you're on your toes, these commodities can make you a lot of money in a very short period of time.

    Stock Stand-out: Lockheed-Martin takes flight
    Pentagon budget cuts arising from sequestration haven't done much to hamper the aerospace and defense industry. The aerospace and defense etf (NYSEARCA:PPA) continues to rally. Today it made another new high helped in part by the 2% jump in the stock of industry giant and the nation's number one defense contractor Lockheed-Martin (LMT, $118). The stock has been on the comeback trail ever since its March low of $86. Since then, it's rallied 37% to close the day near $118. In today's earnings announcement, the company raised third quarter guidance giving the stock a reason to pop. It just won a contract to provide defense weather satellites which is good news but is nothing compared with the F-35 fighter program which is the company's bread-and-butter. Many have worried that sequestration could force program cut-backs but Pentagon officials have been quoted as saying they consider the F-35 to be a "top priority" and so far there have been no funding cuts.

    With a P/E of only 13, Lockheed-Martin is undervalued compared with the rest of the industry group. The company's workforce was reduced in anticipation of sequestration and so far, it's been working. Four analysts rate this company a Strong Buy with twelve rating it a Hold. What this means is if the company can continue to execute its business model, many of the Holds will likely be raised to Buys. The company pays a dividend, currently yielding almost 4%. It's thisclose to testing its all-time high at $120 and a break through that could send it, well, soaring.

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