|Written by GSCR Staff|
|Friday, 03 October 2014 05:53|
Today’s headline is not a mafia reference but rather the one related to money stashing in times of turmoil.
Whether or not we have entered an official bear market in stocks is still up for debate but things are not looking good. What about bonds? Well, a virtual bomb was dropped last week in the fixed income world as Bill Gross left Pimco. Investors withdrew a record $23.5 billion!
So where are we to put our money, a mattress, or buried in a coffee can in the back yard? Let’s not go that far yet. There are two big reasons to stay in your core-satellite portfolio and keep trading, albeit more selectively, and investing.
First, for the trade part, the VIX is on the rise. This is good news for traders. The chart below illustrates the 45% rise in the VIX over the last 6 weeks or so.
3-Month Volatility S&P 500 (VIX)
(Source: Yahoo! Finance)
Seasonality, valuation, momentum, and technical analysis will be critical in trying to pick out winners for losers for the short term trade.
For the longer term one only needs look at the calendar to realize we are one month away from a mid-term election, which means we are about three months away from officially having a lame duck president. Barring possibly the biggest October surprise since the Cuban missile crises, all indications are that the GOP will retain the House and might take control of the Senate. The following equation sets up, lame duck democrat president plus republican congress equals gridlock. Gridlock can be a great stabilizer for investors as it ensures that no ideological or potentially harmful policy affecting the economy should become law.
With so much to think about it may be time for a drink. Not in the literal sense, but returning to one of our Market Monitor picks as an upcoming seasonality play. Castle Brands, Inc. (NYSE – ROX - $1.28) is up over 7.5% since our feature in early April of this year. It is one of the few stocks that still indicate a very bullish DMA in all durations in our screeners. ROX looks to be in play as an accumulation phase over the last three months has seen the price level rise 22% on an average of 575,000 shares traded per day. We think a rise to $1.65 is entirely possible by the end of the year.
Have a great day!
Disclosure: Goldman Small Cap Research analysts are neither long nor short these shares but may elect to purchase the stock within the next 48 hours.
This Market Monitor blog was prepared for informational purposes only. Goldman Small Cap Research, (a division of Two Triangle Consulting Group, LLC) produces research via two formats: Goldman Select Research, which typically highlights small cap companies, and Goldman Opportunity Research, which features micro cap companies in a sponsored research format. Thus, the Select product reflects the Firm’s internally generated stock ideas while the Opportunity product reflects sponsored research reports.
Goldman Small Cap Research is not affiliated in any way with Goldman Sachs & Co.
It is important to note that while we may track performance separately, we utilize the same coverage criteria in determining coverage of all stocks in both research formats. Please view the company’s individual disclosures for each engagement, which can be found in each company-specific report. All information contained in this blog, newsletter and in our reports were provided by the Companies or generated from our own due diligence. Our analysts are responsible only to the public, and are paid in advance to eliminate pecuniary interests, retain editorial control, and ensure independence. Analysts are compensated on a per report basis and not on the basis of his/her recommendations.
The information used and statements of fact made have been obtained from sources considered reliable but we neither guarantee nor represent the completeness or accuracy. Goldman Small Cap Research did not make an independent investigation or inquiry as to the accuracy of any information provided by the Company, or other firms. Goldman Small Cap Research relied solely upon information provided by the Company through its filings, press releases, presentations, and through its own internal due diligence for accuracy and completeness. Such information and the opinions expressed are subject to change without notice. A Goldman Small Cap Research blog, report, note, or newsletter is not intended as an offering, recommendation, or a solicitation of an offer to buy or sell the securities mentioned or discussed.
This blog does not take into account the investment objectives, financial situation, or particular needs of any particular person. This blog does not provide all information material to an investor’s decision about whether or not to make any investment. Any discussion of risks in this presentation is not a disclosure of all risks or a complete discussion of the risks mentioned. Neither Goldman Small Cap Research, nor its parent, is registered as a securities broker-dealer or an investment adviser with FINRA or with any state securities regulatory authority.
ALL INFORMATION IN THIS BLOG, REPORT OR NEWSLETTER IS PROVIDED “AS IS” WITHOUT WARRANTIES, EXPRESSED OR IMPLIED, OR REPRESENTATIONS OF ANY KIND. TO THE FULLEST EXTENT PERMISSIBLE UNDER APPLICABLE LAW, TWO TRIANGLE CONSULTING GROUP, LLC WILL NOT BE LIABLE FOR THE QUALITY, ACCURACY, COMPLETENESS, RELIABILITY OR TIMELINESS OF THIS INFORMATION, OR FOR ANY DIRECT, INDIRECT, CONSEQUENTIAL, INCIDENTAL, SPECIAL OR PUNITIVE DAMAGES THAT MAY ARISE OUT OF THE USE OF THIS INFORMATION BY YOU OR ANYONE ELSE (INCLUDING, BUT NOT LIMITED TO, LOST PROFITS, LOSS OF OPPORTUNITIES, TRADING LOSSES, AND DAMAGES THAT MAY RESULT FROM ANY INACCURACY OR INCOMPLETENESS OF THIS INFORMATION). TO THE FULLEST EXTENT PERMITTED BY LAW, TWO TRIANGLE CONSULTING GROUP, LLC WILL NOT BE LIABLE TO YOU OR ANYONE ELSE UNDER ANY TORT, CONTRACT, NEGLIGENCE, STRICT LIABILITY, PRODUCTS LIABILITY, OR OTHER THEORY WITH RESPECT TO THIS PRESENTATION OF INFORMATION.
For more information, visit our Disclaimer: www.goldmanresearch.com