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Welcome to Profit Confidential • Tuesday, May 22, 2012

The Stock Market Could Go Either Way

Wednesday, December 5th, 2007
By Mitchell Clark, B.Comm. for Profit Confidential

One of my favorite companies just split its stock two-for-one. LKQ Corporation (NASDAQ/LKQX) operates in the auto parts business, which, I have to admit, is a somewhat unexciting and mature industry.

It doesn’t really matter in this particular case — the stock doubled this year.

Another company that continues to be an outstanding wealth- creator for stockholders is an old favorite, New Oriental Education & Technology Group, Inc. (NYSE/EDU). This stock is up over threefold since I first came across this company. There’s no doubt it is expensively priced, but it is likely to remain expensively priced, as investors continue to put money into well-managed China growth stocks.

As I wrote previously, I still feel the stock market is at a crossroads right now. We are close to a turning point that could go either way.

In my experience, for the most part, stock market participants tend to be an optimistic group and they want to bet on a brighter future. Sentiment is quite fragile right now and I firmly believe that it’s equally probable that the stock market will either resume its downtrend or develop a new, more positive trend going into the New Year.

What I don’t expect is any runaway market for stock prices in either direction. I think this is a view held by many on Wall Street.

The Dow Jones Transportation Average, which is always an important benchmark, doesn’t look too healthy in this market. A quick look at this index reveals that its most recent trading action is virtually identical to its performance in mid-2006.

One thing’s for certain, there is precious little time left for the important benchmarks in the marketplace. Either we get a reversal soon, or we might get a much worse breakdown in stock prices.

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Profit Confidential AuthorMitchell is a Senior Editor at Lombardi Financial specializing in small-cap stocks. He’s the editor of a variety of popular Lombardi Financial newsletters, such as Penny Stock Reporter, Micro-Cap Stocks, and Monster Profits. Mitchell, who has been with Lombardi Financial for thirteen years, won the Jack Madden Prize in economic history and is a long-time student of equity markets. Prior to joining Lombardi, Mitchell was as a stock broker for a large investment bank. While Mitchell is not working he enjoys fly fishing, motorcycling and tending to his hobby farm.

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