Dan Stewart CFA®
President/Chief Investment Officer
NorAm Asset Management
Before I begin I wanted to let you know that we will be sending out a Video Newsletter Saturday at 9:30 a.m. just before our radio show, The Wall Street Shuffle, at 10:00 a.m. on 1190 AM in DFW. It is a quick, 5-7 minute video with graphs of actionable ideas we are either researching or actually doing. We will be discussing these ideas on the show so you can follow along visually as we discuss the particular theme, sector, or stock. I hope you enjoy. Now to the newsletter.
The markets had a nice rally yesterday with the DOW recouping all of its losses from Friday. The S&P 500 and NASDAQ recouped most of their losses. So the pullback is over and the skies are clear, right?!
That is the big question: whether this pullback has run its course or has further to the downside before enticing sustainable buying. For clues, let’s examine the market internals. We need to look at the price/volume action of leading stocks and overall volume of the exchanges.
Many of the leading stocks struggled to keep up with the overall indices, and many were even in the red. Total volume was very light, down 17% from yesterday on both the NYSE and down the NASDAQ. Additionally, both exchanges were down double digit from their 50 day moving averages (50 DMA). Up Volume was 73% on the NYSE and only 53% on the NASDAQ. Advancing issues were only 65% and 53% respectively.
Clearly it wasn’t a broad based rally on expanding volume. Rather, it was a low-volume rally on narrow breadth.
This doesn’t exactly make me uber bullish. And as I have written recently, volatility is on the rise with 100 point + or – back to back days. This trend is likely to continue.
So to answer your question you whether this pullback has run its course: simply put, probably not. It is very probable we will get a little further rally right up to resistance, then rollover.
So how are we going to play it? Simple, we have stocks in one of the strongest sectors, namely energy and utilities (via an ETF for the utilities). Our most recent equity position we added was Schlumberger (SLB).
We also took a position in the 20 year treasuries via an ETF. We did this as a defensive measure and bonds are acting right at the moment. Using the ETF will allow easy entry and exit. So we have some cash, 10% bonds, master limited partnerships (MLPs), and some individual stocks showing the most strength.
For a complimentary portfolio review, e-mail me at Dan.Stewart@NorAmAsset.com and we would be happy to review positions. We can evaluate your sector risk and individual equity exposure.
We have numerous economic reports including CPI and all of its iterations. We have 9 companies reporting on the S&P 500, 3 of which, are also included in the DOW.
We have 10 companies reporting in the broader markets. Some notables are below.
Remember to tune into The Wall Street Shuffle Saturdays on 1190 AM at 10 a.m. in DFW. You can also listen via iHeart radio.
Again, as a newsletter subscriber, you will receive short weekend video at 9:30 a.m. on Saturday so you can watch & then follow along on The Wall Street Shuffle radio show as we will be covering these topics specifically.
I hope you enjoy the show. If you have any investment questions you would like discussed on the air or specific investment questions in which you would like personal advice, e-mail me at Dan.Stewart@NorAmAsset.com and I will be happy to respond.
Dan Stewart CFA®
Chief Investment Officer
NorAm Asset Management
Economic Reports Today:
Consumer Price Index (CPI)
CPI ex Food & Energy
CPI Urban Consumers
US Foreign Net Transactions
US Treasury Intl Capital Flows
NAHB Housing Market Index
Some Notable Earnings Reports Today:
Coca-Cola (KO – before market)
Johnson & Johnson (JNJ – before market)
Charles Schwab (SCHW)
CSX Corp (CSX – after market)
Yahoo (YHOO – after market)
Intel (INTC – after market)
Interactive Brokers (IBKR)
The information presented is for educational and entertainment purposes only. Opinions and information expressed are based upon information considered reliable. However, factors are constantly changing and should not be relied upon. You need to do and verify your own research.
Moreover, no reader or listener should assume that any information or discussion presented serves as personalized investment advice from NorAm Asset Management, Inc. or from any other investment professional, and is not an offer of solicitation for the sale or purchase
of any specific securities, investments, or investment strategies. You need to have your own, individual investment advice suitable for your personal situation.
Investments involve risk and unless otherwise stated are not guaranteed.