Monday, May 07, 2012

The Morning Call + Monday Morning Chartology + Subscriber Alert



The Market
Technical

Monday Morning Chartology


The S&P is now challenging the 1372 support level; it will be mid to late this week before we know if it is successful. The index has also busted through the 50 day moving average (wiggly red line).




GLD continues to hold the lower boundary of its short term trading range. In doing so, it is also building the right shoulder of a reverse head and shoulders formation.




The VIX remains in a short/intermediate term trading range. Notice it also is building a reverse head and shoulders pattern; if it is successfully completed, it would be bad news for stocks.




Fundamental

A big weekend in Europe: (1) in France, the socialist candidate wins. What happens to the French/German financial alliance? How far will Hollande go in cutting back on austerity and will he propose any meaningful growth measures as an offset?, (2) the anti bailout parties win in Greece. What the hell does that mean? They don’t want to be bailed out? They are unwilling to take the fiscal steps necessary to be bailed out? If so, what happens then? The economic/social fabric of the country is already coming unraveled, (3) the Spanish government announced that it was going to bail out its banks. With what? The money the banks got from the LTRO that it used to buy Spanish government bonds? Good luck with that one.

Nothing encouraging. My ‘muddle through’ scenario grows dimmer.

Subscriber Alert

The stock price of Nucor ($38) has traded below the upper boundary of its Buy Value Range. Accordingly, it is being Added to the Dividend Growth Buy List. The Dividend Growth Portfolio owns a one half position in NUE but will not be Adding to it at this time.

The stock price of Sigma Aldrich ($69) has traded below the upper boundary of its Buy Value Range. Therefore, it is being Added to the Dividend Growth and Aggressive Growth Buy Lists. Both Portfolios own SIAL and will not be Adding to their holdings.

News on Stocks in Our Portfolios

More quarterly earnings per share reports:

Reported Expected

HollyFrontier $1.16 $1.23


Economics

This Week’s Data

Other


Despite Friday’s weak nonfarm payrolls number, manufacturing employment continues to climb (short):
http://mjperry.blogspot.com/2012/05/manufacturing-jos-gains-continue-to.html

The US government’s Ponzi scheme (medium):
http://www.zerohedge.com/news/guest-post-shattering-american-dream-us-government%E2%80%99s-ponzi-scheme

A great piece by Lacy Hunt of debt, deleveraging and depression. A bit long but today’s must read):
http://www.zerohedge.com/news/guest-post-dr-lacy-hunt-debt-disequilibrium-deleveraging-and-depression

Politics

Domestic

International


Norway’s sovereign wealth fund sells all its insolvent EU sovereign debt (medium):
http://www.zerohedge.com/news/norway-sovereign-wealth-fund-purges-all-insolvent-eurozone-debt-holdings-us-hedge-funds-buying


Steve Cook received his education in investments from Harvard, where he earned an MBA, New York University, where he did post graduate work in economics and financial analysis and the CFA Institute, where he earned the Chartered Financial Analysts designation in 1973. His 40 years of investment experience includes institutional portfolio management at Scudder, Stevens and Clark and Bear Stearns. Steve's goal at Strategic Stock Investments is to help other investors build wealth and benefit from the investing lessons he learned the hard way.