Market Monitor

From time to time, conventional wisdom regarding a given stock is that it may be rightly out of favor on a qualitative basis. However, a stock can be still be attractive on a quantitative basis, thus making it a compelling buy. A great example of this phenomenon is Cirrus Logic, Inc. (NASDAQ -CRUS- $19.48).

The Russell 2000 and correlated iShares Russell 2000 ETF (NYSE – IWM) are both on almost a two week slide that started the day after Thanksgiving.  The index is down about 2% and the ETF is down about 3%.  Is this a sign of a longer term slide and has the small cap sector run its course, or is this just a minor correction in a bull market?  We think the latter, as the technical analysis and valuation both indicate that the bull market is here to stay for a while.  What is more than likely occurring is some short term profit taking on  some great gains for the year.

In keeping with the theme from the Goldman Guide yesterday we will look at one of our old Market Monitor picks that has had some success in 2013 and looks like it may run some more over the next few months. Our technology picks have been a mixed bag this year, with general success overall.  The Technology Select SPDR (NYSE – XLK) is up nearly 18% this year, and the technical analysis is very bullish.  Last week the U.S. Bureau of Economic Analysis reported a 3.6% growth rate in GDP continuing the positive trend for the fourth straight quarter.  We think 2014 will be a good year for the right small cap tech play.

Way back in January we highlighted Amkor Technology, Inc. (NASDAQ – AMKR - $5.79). 

In yesterday’s Market Monitor we used the tagline “Don’t Believe the Economic Hype” citing several instances of contradictory data which refute the supposed economic recovery touted by the U.S. Federal Reserve.  Cleary, policy makers seem out of touch with Main Street, the people they claim to be helping, and spinning reality in a sort of Orwellian Ministry of Truth propaganda machine.  What is clear is that the current $85 billion FOMC program is a big reason for the near 5-year bull run on Wall Street, which, coupled with high corporate profits, leads to positive quarterly financial results, something traders and investors love.  And our argument is that the so-called taper is not going to occur anytime soon.

December 2013 Federal Reserve Policy Outlook

Mark Twain said, “The reports of my death have been greatly exaggerated.”

We hope everyone enjoyed the long weekend and the Thanksgiving holiday. While the time between Thanksgiving and New Year’s is generally very slow in the industry, there are still deals to be had.

In yesterday’s Goldman Guide we discussed three ways the Federal Government may ruin this great bull market we are currently enjoying.

I saw my first Tesla (Tesla Motors, Inc. – NASDAQ- TSLA - $121.11) automobile a few months back and the first thing that popped into my head was the flying DeLorean equipped for time travel with the innovative ‘flux capacitor’ in the Back to the Future movies.

Sunday and early Monday there were some highly unusual storms with devastating winds and tornadoes in the Midwest causing a lot of damage and human casualties. Every time these events occur, all one can do is be grateful it was not you and provide any support for those affected. Let’s hope the recovery is swift and effective.