The Peter Dag PORTFOLIO STRATEGY & MANAGEMENT
65 Lakefront Dr., Akron, OH 44319.
1 year, 24 issues, $389. www.peterdag.com.
George Dagnino: "The long-term outlook (next 12 months) based on fundamental indicators remains bullish.
The most bullish trend for the market is the still depressing state of the labor market. The Fed will be forced to keep easing and pump money into the economy. This is what is driving the market. Other positive trends are the decline in corporate bonds and the steep yield curve. Unemployment claims keep declining. Stock volatility remains low. These are all bullish trends.
Technical Indicators - It is a difficult call to make. The market is up more than 200 points. The daily indicators are rising suggesting the odds favor higher prices. The weekly gauges, however, are failing to turn up. Bottom line: close to a bottom but not there yet.
Seasonality is positive. The end of the year rally is a tradition, as investors look for performance. Sentiment data reflect caution, which is bullish, of course, from a contrarain viewpoint.
Outlook. As the economy strengthens, sectors such as energy, retail, international banking, insurance and REITs are gaining in relative strength. Increase the allocation to these sectors. High-yield bonds are beginning to underperform, reflecting a different strength profile of the market.
The US economy. The ISM indexes shows the manufacturing sector is growing at a brisk pace. Orders for durable goods have jumped. This is good news because it shows that manufacturers are being forced to replenish inventories.
The housing sector seems to have bottomed and home prices have firmed. The index of leading indicators is moving higher followed by strength in the coincident index. Bottom line: the economy will continue to improve.
Commodities have resumed their uptrend which started in March. The strength is uniform and is troubling. There is no doubt they are responding to improving global economic conditions. Commodity prices are very sensitive, in fact, to economic growth.
Gold and the dollar. The dollar will stay weak. The policies of the US government are bearish for the dollar. Make no mistake about it. Gold will rise but will continue to underperform other asset classes. Financials have outperformed gold and materials by a wide margin since March. Gold is not a good investment in spite of all the emotions it generates. Commodity-driven asset classes are likely to provide much better and more reliable returns."
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THE CHARTIST
P.O. Box 758, Seal Beach, California 90740.
1 year, 17 issues, $200. www.thechartist.com.
Dan Sullivan: "We remain in the bullish camp and continue to recommend a 100% invested position.
With our models in a bullish mode, we feel it is only a matter of time before the market makes still another recovery high.
The latest from Investors Intelligence now shows 48.3% of the stock market newsletter they track in the bullish camp versus 24.7% bears. The percentage of bulls has been in a narrow range since August 11th between 51.6% and 46.7%. Investor's Intelligence associates bulls at 55-60% with major tops. The last time this occurred was back in early October of 2007 coinciding with the peak of the bull market that was in effect at the time. We think there is still enough skepticism in these numbers; in fact, it is surprising that they are not higher given the magnitude of the gains since the March lows.
The American Association of Individual Investors (AAII) in their weekly poll continue to show a great deal more skepticism than the newsletter writers with only 22.2% in the bullish camp versus 55.6% bears. This was the third week in a row in which the percentage of bulls had concentrated, and conversely it was the third week in a row in which the bullish consensus increased. The bullish consensus is well under its long-term average of 38.9%, while the bearish percentage is well above its long-term average of 30%. There is no question that the AAII numbers are bullish from a contrary opinion standpoint. The current percentage of bulls is at its lowest level since March 5th when it clocked in at 18.92%.
Whirlpool Corp. (NYSE: WHR), founded in 1906, engages in the manufacture and marketing of home appliances worldwide. Its principal products include laundry appliances, refrigerators, cooking appliances, dishwashers, mixers, and other small household appliances. It distributes its products under various brand names, including Whirlpool, Maytag, KitchenAid, Jenn-Air, Roper, Estate, Admiral, Magic Chef, Amana, Inglis, Acros, KIC, Ignis, Bauknecht, Brastemp, Consul, Eslabon de Lujo, Laden, Polar, and Supermatic. For the third quarter, the company reported net revenue of $4.5 billion and earnings per share of $1.15. Operating profit increased 89% from the same period last year, from $74 million to $140 million.
Massey Energy Co. (NYSE: MEE), included in the S&P 500 Index, is the fourth largest coal company in the U.S. and the largest in Central Appalachia based on produced coal revenue. The Virginia based company provides products including thermal coal for power generating utilities, industrial coal for industrial customers, and metallurgical coal for the production of steel. For the third quarter, the company reported earnings of $16.5 million or $.19 per share, and revenue of $641.6 million. Despite economic times, the company increased cash holdings to $640 million, up from $609.6 million at the end of second quarter.
Peabody Energy Corp. (NYSE: BTU) is the world's largest private-sector coal company, engaging in the international exploration, mining, and production of coal. Founded in 1883, they own interest in 30 operations located in the U.S. and Australia, as well as joint ventures in Venezuela.
For the third quarter ending September 30, the company reported income from continuing operations of $113.2 million with earnings per share of $0.41. Third quarter revenues totaled $1.67 billion compared with $1.34 billion for the second quarter of 2009. Management reports focus on cost containment programs, tight capital discipline, and reduction of inventories to enhance long-term growth.
Teck Resources, Ltd. (NYSE: TCK) is Canada's largest diversified mining, mineral processing, and metallurgical company. Headquartered in Vancouver, they are a world leader in the production of copper, metallurgical coal and zinc, molybdenum and specialty metals, with interests in several oil sands development assets. They own or have interests in 13 mines in Canada, the U.S., Chile, and Peru, as well as a metallurgical complex in Canada. The company announces third quarter net earnings of $609 million, or $1.07 per share, compared to net earnings of $424 million for the third quarter in 2008. They reported record revenues in for both the third quarter of 2009 and on a year-to-date basis of $2.1 billion and $5.5 billion respectively."
THE LYKE REPORT
P.O. Box 290, Glenview, Il 60025.
Monthly, 1 year, $89. www.lykepublications.com.
John Lyke: "Back in April, we expressed serious concerns about the Cybersecurity Act of 2009, a bill by Senators Jay Rockefeller (D-WV) and Olympia Snowe (R-ME) that sought to give the federal government unprecedented power over the Internet. The bill was redrafted (behind closed doors), and a "new" version has recently been circulated. Unfortunately, the changes seem to be nothing more than cosmetic.
Like the original bill, the new version appears to give the President carte blanche to decide which networks and systems - including non-governmental, private networks and systems - count as "critical infrastructure information systems or networks." And there still appears to be language that would permit the President to shut down the Internet."
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-- NOVEMBER 2009