Lombardi: Stock Market Commentary & Forecasts, Financial & Economic Analysis Since 1986

Stock Market Bounce? The Price of Oil Says No

Friday, October 26th, 2012
By for Profit Confidential

There are very few stocks accelerating in this market; the vast majority of stocks have pulled back from their recent highs. We may yet get another period of stock market upside—another kick at the can before a meaningful correction. This market is due for a correction, and with revenue and earnings expectations coming down, it would be a natural development right after third-quarter earnings season comes to a close.

There’s been some very good price pops among blue chips; a recent standout is Johnson & Johnson (NYSE/JNJ), which surprised the stock market with its earnings. But there’s been a meaningful breakdown in a lot of stocks, especially those with significant international operations, not surprisingly. We’ve had weak stock market performances (and earnings) from companies like NIKE, Inc. (NYSE/NKE) and McDonalds Corporation (NYSE/MCD), which were former stock market leaders until May of this year. The stock spiked over four points on the news and has done well since June. Johnson & Johnson’s stock chart is

johnson and johnson stock chart

Chart courtesy of www.StockCharts.com

PepsiCo, Inc. (NYSE/PEP) is a benchmark stock that I always follow. This company is fairly priced and boasts a current dividend yield of 3.1%; but the stock has been breaking down since late August and remains in a clear downtrend. PepsiCo’s stock chart is featured below:

pepsico inc stock chart

  • Still worried about the economy? Become an elite charter member of George's DAILY PROFITS and you could...

    TRIPLE YOUR MONEY IN A MONTH!

    George gave us the $2.8-billion IT infrastructure provider, up 4,745.20%; the $1.8-billion advertising agency, up 1,295.44%; and the $762-million business software company, up 1,213.19%.

    Only charter members can follow George daily.

    Learn how here!

Chart courtesy of www.StockCharts.com

 The Coco-Cola Company (NYSE/KO) is performing similarly, along with many other brand-name consumer stocks. (See “What Makes Dividend Increases Market-moving News.”) With so many blue chips well below their recent highs, I don’t see the stock market producing a meaningful advance until these positions turn around. Third-quarter earnings were mediocre and third-quarter revenues were worse.

So while we might get some near-term upside due to some more positive economic news, the stock market is signaling a correction, and investors shouldn’t be considering new positions. I’d like to see a meaningful correction in the main stock market indices before I consider buying. Corporate earnings aren’t really expected to grow next quarter. Mind you, so many individual investors aren’t participating in this market anyway because the headwinds are very obvious.

The spot price of oil continues to be one of the best near-term gauges on investor sentiment. At $88.00 a barrel for West Texas Intermediate (WTI), it isn’t saying much.

VN:F [1.9.22_1171]
Rating: 0.0/10 (0 votes cast)
VN:F [1.9.22_1171]
Rating: 0 (from 0 votes)

This is an entirely free service. No credit card required.

We hate spam as much as you do.
Check out our privacy policy.

Mitchell Clark - Equity Markets Specialist, Financial AdvisorMitchell Clark, B. Comm. is a Senior Editor at Lombardi Financial specializing in large- and micro-cap stocks. He’s the editor of a variety of popular Lombardi Financial newsletters, such as Income for Life and Micro-Cap Reporter. Mitchell, who has been with Lombardi Financial for 17 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. Add Mitchell Clark to your Google+ circles

The Great Crash of 2014

A stock market crash bigger than what happened in 2008 and early 2009 is headed our way.

In fact, we are predicting this crash will be even more devastating than the 1929 crash…

…the ramifications of which will hit the economy and Americans deeper than anything we’ve ever seen.

Our 27-year-old research firm feels so strongly about this, we’ve just produced a video to warn investors called, “The Great Crash of 2014.”

In case you are not familiar with our research work on the stock market:

In late 2001, in the aftermath of 9/11, we told our clients to buy small-cap stocks. They rose about 100% after we made that call.

We were one of the first major advisors to turn bullish on gold.

Throughout 2002, we urged our readers to buy gold stocks; many of which doubled and even tripled in price.

In November of 2007, we started begging our customers to get out of the stock market. Shortly afterwards, it was widely recognized that October 2007 was the top for stocks.

We correctly predicted the crash in the stock market of 2008 and early 2009.

And in March of 2009, we started telling our readers to jump into small caps. The Russell 2000 gained about 175% from when we made that call in 2009 to today.

Many investors will find our next prediction hard to believe until they see all the proof we have to back it up.

Even if you don’t own stocks, what’s about to happen will affect you!

I urge you to be among the first to get our next major prediction.
See it here now in this just-released alarming video.