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Stock Market Commentary & Forecasts, Financial & Economic Analysis

Welcome to Profit Confidential • Wednesday, May 23, 2012

Market Leaders Show Growth Ahead

Wednesday, May 2nd, 2007
By Mitchell Clark, B.Comm. for Profit Confidential

I always make it a habit to check in with some bellwether stocks just to see what they are doing. Some may not be the top performers in their respective industries anymore, but I find that following big, brand-name stocks really helps with my market view. Some of the companies I like to check with periodically are IBM Corp., General Electric Company, Hewlett-Packard Company, Caterpillar Inc., Deere & Company, and The Procter & Gamble Company. I look at stock charts, earnings reports, and major new corporate developments.

What I’m trying to discover by taking in all this information are trends in both the economy and the overall direction of stock prices.

What jumps out at you if you look up the stock charts of these companies is that there’s been a remarkable turnaround in the fortune of these stocks over the last month. Clearly, there’s a very good reason why the Dow Jones Industrial Average is trading at a new all-time high.

The stock market leadership from the biggest and most well- established companies bodes well for the broader market. There is good reason to be optimistic for the rest of this year.

Most of the above-mentioned companies reported solid earnings results in the first quarter this year. This is when the gross domestic product (GDP) numbers came in at their slowest pace in years. What this tells me is that the slowing economy is mainly due to only a few sectors and not commensurate with the entire economy. It also suggests to me that the broader economy is in a much healthier state than Wall Street gives it credit for.

So, the good news is that if the real estate sector stabilizes and inflation is kept under control, I believe economic growth will accelerate later this year. This will provide solid fundamental environment for a good stock market performance. It’s going to be touch-and-go for a while, but the overall trend for stocks is positive.

 

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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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