Any information or research provided based on a specific methodology for the stock market is seen as providing advice. Advice can be considered the best stock advice when the provider of this research has a track record of being correct in their forecasts. This forecast can be for specific stocks, the overall stock market index, specific sectors and different time frames. Consistently providing insightful information is seen as having the best stock advice.
The DOW broke above 13,000 on February 21 for the first time since May 2008, while 14,000 has not been touched since October 2007. My market view is that the upside break at 13,000 is bullish if it can hold, but the light trading volume suggests a minor bearish divergence between price and volume.
My market view is positive and suggests that more gains may be coming, albeit stocks are technically overbought on the charts and are subject to resistance selling on upward moves.
The market view remains bullish; a golden cross is in effect, with the 50-day moving average (MA) above the 200-day MA. The buying bias continued into the first two weeks of February with technology and small-cap stocks driving the broader market. The NASDAQ is up over 13%, while the Russell 2000 is up nearly 12%, above the 8.52% for the S&P 500 and the 6.36% for the DOW.
Technology has provided some strong leadership to the market, with the NASDAQ eyeing 3,000 and a decade high. My market view is to be careful, as the chart looks overextended in the near term.
The S&P 500 broke above 1,350 on February 8 for the first time since July 2011. My market view is that a sustained break could see a move towards 1,400.
My market view is also that the buying in small-cap stocks suggests continued economy recovery in 2012. So far this year, the housing and manufacturing data are encouraging and point to renewal.
While investor sentiment continues to be bullish and market breadth positive, my market view is that the lack of mass market participation is worrisome and makes stocks vulnerable to downside risk in the event of bad news surfacing in the U.S. and globally.
What concerns me somewhat is the unresponsiveness of stocks despite the approval of the debt swap resolution in Greece by the eurozone and International Monetary Fund that will prevent a default for the troubled debt-laden country. In my market view, the pause suggests th… Read More
There are a number of benchmark stocks that I follow and, even though I may not own them, these stocks are very good indicators either for a specific industry, the economy in general, or the stock market.
One company that I feel is an important benchmark stock to follow is Automatic Data Processing, Inc. (NASDAQ/ADP). This well-known payroll and human resources outsourcing company provides a great barometer on the Main Street economy and the U.S. employment picture specifically. The stock corrected along with the broader stock market to $45.00 per share in the third quarter of last year, then recovered smartly back above $50.00 per share. Now the stock is trading at approximately $55.00 per share and it recently hit a new 52-week high of $57.10 per share. As a benchmark stock, this performance is telling.
Automatic Data Processing’s quarterly results last year were very solid considering the state of the economy and earnings held up well. Just in the last 30 days, a number of Street analysts increased their earnings estimates for Automatic Data Processing’s next two quarters and its upcoming fiscal year. If a benchmark stock like Automatic Data Processing is trading right near its 52-week high, then, in my mind, it’s one more sign that the U.S. economy is moving in the right direction, albeit slowly.
Another benchmark stock that’s always worth keeping an eye on is IBM Corporation (NYSE/IBM), which has proven to be an outstanding wealth creator on the stock market, especially recently. It truly is impressive to see a $200-billion-dollar company appreciate so much on the stock market. This stock has been going up, virtually in a straight line, since September of 2010. Back then; it was trading around $125.00 a share. Today, the stock is priced right at its all-time record high of $194.00 per share, trading at about 15 times trailing earnings. This to me is impressive. IBM is a be… Read More
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