CWS Market Review – August 9, 2013

August 9, 2013

“I made my money by selling too soon.” – Bernard Baruch

As I expected, this was a quiet week on Wall Street. Consider this: Tuesday was the S&P 500’s worst day since June 24th, but the more arresting fact is that that terrible, awful plunge was a loss of a mere -0.57%. Yes, that was our worst loss in a span of 30 trading days! Sheesh, going by recent history, -0.57% doesn’t even scratch the paint. In 2008, the S&P 500 lost more than -0.57% in a single day 38% of the time. How times have changed.

Much of the calmness is certainly due to the wrapping up of Q2 earnings season. I’m happy to say that this earnings season was a good one. So far, 443 stocks in the S&P 500 have reported earnings; 72% have beaten earnings expectations, and 55% have beaten their sales expectations. We had two very good earnings reports this past week. Cognizant Technology Solutions (CTSH) smashed analysts’ estimates by 10 cents per share, and they guided higher for the year. Also, Nicholas Financial (NICK) churned out another stellar quarter. I’ll have more on these two in a bit, plus higher Buy Below prices.

I was pleased to see a strong trade report this week. Exports are at a record high, and the U.S. trade deficit is the narrowest it’s been since 2009. The trade report will probably cause the number crunchers to revise the Q2 GDP report higher by 0.5% to 1.0%. That’s also more in line with the earnings reports we’ve seen from the private sector. Also, the ISM Non-Manufacturing Index from earlier this week was particularly strong.

In this week’s CWS Market Review, I want to bring you up to speed on several of our Buy List stocks. It turns out that Ford (F) is having trouble keeping up with demand. The automaker literally can’t build its cars fast enough! But first, let’s look at the outstanding earnings report from Cognizant Technology.

Cognizant Technology Is a Buy up to $78 Per Share

In April, shares of Cognizant Technology Solutions (CTSH) got treated to a first-class beat-down. The stock, which had cracked $81 in March, was wallowing below $62 by late April. Of course, one of the benefits of our set-and-forget Buy List is that we don’t get scared out of plunging stocks. We stand firm and watch the storm clouds pass us by.

What freaked out the market was poor earnings by Cognizant’s competitors. There were also concerns that Congress’s pending immigration legislation would be bad for the outsourcing business. The good news came in May, when Cognizant beat earnings by eight cents per share and delivered positive guidance for Q2.

Despite the impressive outlook, the stock didn’t do much. I knew it was time to strike. In the June 28th issue of CWS Market Review, I highlighted Cognizant as being “particularly attractive at the moment.” Sure enough, the stock started to rally in July, and it soon broke $74 per share.

This past Tuesday, we got another solid earnings report from Cognizant, plus strong guidance. For Q2, CTSH earned $1.07 per share, which was ten cents better than estimates. Quarterly revenue rose 20.4% to $2.16 billion, which was $30 million better than expectations.

Cognizant now sees full-year earnings of at least $4.32 per share on revenue of $8.74 billion. That’s revenue growth of 19%. For Q3, CTSH sees earnings of $1.09 per share. Wall Street had been expecting $1.03 per share. The stock gapped up over $76 on Tuesday, although it later gave back much of those gains. Don’t think you’re too late to party. I’m raising Cognizant’s Buy Below to $78. CTSH remains a very good buy.

I’m Raising NICK’s Buy Below to $17 Per Share

Also on Tuesday, Nicholas Financial (NICK) reported fiscal first-quarter earnings of 46 cents per share. That’s basically in line with what I was expecting. As things stand now, the used-car lender can keep churning out profits of 40 to 45 cents per share for a long time. The economy continues to improve, and this means their loan portfolio is getting stronger. We also have the Fed’s commitment to keep short-term rates low for an extended time. That’s good for NICK.

Looking at the numbers, it appears that NICK benefited from about four cents per share after taxes, thanks to the interest-rate-swap agreement. I can’t find the details yet, because it looks like there’s been an accounting change which adds about $3 million to quarterly revenues. NICK’s stock didn’t react strongly to the earnings news, which is fine by me. With smaller-cap stocks, there’s often a delayed reaction of a few days after a good earnings report.

One thing I’d like to see NICK do is raise its quarterly dividend. The current dividend is 12 cents per share, or 48 cents for the year. At Thursday’s closing price, that works out to 3.1%. I think NICK can raise its dividend as high as 15 cents per share. The company has previously announced its dividend after the conclusion of the shareholder meeting, which is usually in August. This year, the meeting will be held in December. I’m going to raise my Buy Below on NICK to $17 per share. Nicholas Financial is an excellent buy.

Updates on Our Buy List Stocks

I want to add a few updates on some Buy List stocks.

After its great earnings report, Fiserv (FISV) keeps on rallying. The shares got as high as $101.85 on Thursday. The company just announced a new share-repurchase authorization for 10 million shares, which is about 8% of their outstanding shares. This is a very strong company.

Our healthcare stocks like Stryker (SYK), Medtronic (MDT) and CR Bard (BCR) have been doing quite well lately. MDT nearly got to $56 this week. A judge just ordered Zimmer Holdings to pay Stryker $228 million to settle a patent suit. That’s nice to hear. CR Bard seems to go up every day. The stock just hit another 52-week high. BCR is up nearly 20% since April 24th.

Ted Reed at TheStreet.com had an interesting article on Ford (F). It turns out that Ford is actually having trouble making its cars fast enough to meet demand. Ford’s inventory is running dangerously low. Reed says, “Ford’s Fusion supply is down to 30 days, about half the industry average, while the Escape supply is around 40 days.” The good news is that Ford is expanding to meet demand.

JPMorgan (JPM) revealed this week that the bank faces civil and criminal charges over sales of its mortgage-backed securities between 2005 and 2007. The stock slumped a bit on the news. For now, I don’t want to comment on the potential impact of this, since it’s too early to say. I don’t have any reason to believe it will impact the long-term profitability of JPM. But now is a good time to reiterate my belief that Jamie Dimon should step aside.

We’re now done with earnings reports for Buy List stocks that have a June reporting period. We have two Buy List stocks, Ross Stores (ROST) and Medtronic (MDT), that ended their quarters in July. Those two should be reporting their earnings in two weeks.

Through Thursday, our Buy List is up 24.13% for the year, compared with 19.02% for the S&P 500 (not including dividends). That’s our biggest lead of the year. If all goes well, this will be our seventh straight year of beating the S&P 500.

That’s all for now. Next week, we’ll get some important economic reports. On Tuesday, the Census Bureau reports on retail sales. This will give us a look at how strong the consumer is. Then on Thursday, we’ll get the inflation report for July. Also on Thursday, the Federal Reserve reports on Industrial Production. Be sure to keep checking the blog for daily updates. I’ll have more market analysis for you in the next issue of CWS Market Review!

– Eddy

Named by CNN/Money as the best buy-and-hold blogger, Eddy Elfenbein is the editor of Crossing Wall Street. His free Buy List has beaten the S&P 500 for the last six years in a row. This email was sent by Eddy Elfenbein through Crossing Wall Street.

CWS Market Review – February 1, 2013

February 1, 2013
“There are two times in a man’s life when he shouldn’t speculate:
                When he can afford to and when he can’t.” – Mark Twain

Remember the panic about the Fiscal Cliff? And the Debt Ceiling? And the Sequester? And about a dozen other things the financial media told us — insisted — that we simply had to worry about?

Well, here we are a few weeks later the Dow Jones Industrial Average just closed out its best January in 19 years. The Wilshire 5000, the broadest measure of the U.S. stock market, is just below its all-time high.

Fortunately, we stuck by our strategy and ignored the noise-making scaremongers on TV. What may be even more impressive is how low the market’s volatility has been. Consider this: On Wednesday, the S&P 500 had a rather minor loss of just 0.39% and that was its worst loss of the year! Between January 9th and January 25th, the S&P 500 rallied 12 times in 13 sessions, and the only downer was a miniscule 0.09% drop.

But I have to frank; the rally is beginning to look a little tired. For example, the S&P 500 tried to break 1,510 a few times this week and wasn’t able to bust through. That’s not a good sign. I think it’s very possible the bears may take back control of Wall Street in February. Nothing too serious, mind you, but just enough to scare the bulls away.

This was a mixed week for our Buy List stocks. The earnings reports were quite good, but some of our stocks, like Ford Motor (F) and Harris (HRS), didn’t respond well. That’s frustrating, but as you know, we’re in this game for the long haul.

We also had a negative GDP report for Q4 and that spooked a lot folks. As odd as it may sound, the negative report really wasn’t that bad. When you look past the plunging military spending, the economy isn’t so bad and we’re poised for decent growth in 2013. The other big news this past week was the Fed meeting. We learned that Bernanke & Co. are firmly committed to keeping the money spigots going for awhile longer. Some folks misread the December minutes believing that the Fed was going to pull back soon. Sorry, not a chance.

Now let’s take a look at some of our recent Buy List earnings reports.

Ford Is a Buy Up to $15 Per Share

In last week’s CWS Market Review, I told you to expect a big earnings beat from Ford Motor (F). Technically, I was correct. The company earned 31 cents per share which was 24% higher than the 25 cents per share that Wall Street was expecting.

Despite the earnings beat, Ford warned that its losses in Europe this year would be worse than it had anticipated. Traders overreacted (of course, or they wouldn’t be traders) and brought the stock back below $13 per share. Let me be clear that Ford’s business is doing very well, especially in North America. Their pre-tax earnings in North America soared 110% from Q4 of 2011.

The New York Times described Q4 as a “microcosm of Ford’s recent overall performance.” In other words, strong America, weak Europe. But Ford’s strength in North America didn’t come about quickly. It was part of a painful structuring process that’s only now paying dividends (literally, as Ford doubled its payout three weeks ago). Ford is employing that same turnaround strategy in Europe today, and the good news is that they’re far ahead of General Motors.

Don’t worry about the pullback in Ford. If you don’t already own it, the stock is a very good deal especially if you can get it below $13. Thanks to higher dividend, Ford currently yields 3.1%. I rate Ford a solid buy up to $15 per share.

Lower Guidance from Moog and Harris

On Tuesday, Harris (HRS), the communications equipment company, reported earnings of $1.25 per share for the December quarter which is the company’s fiscal Q2. This was five cents ahead of Wall Street’s consensus. Quarterly revenue dropped from $1.31 billion to $1.29 billion.

While Harris’ results were good, the news that has me concerned is that the company lowered its full-year guidance. I find that I often tell investors not to worry about this, or don’t worry about that. But lower guidance is indeed something to worry about. (By the way, I’m very glad we ditched JoS. A Bank from this year’s Buy List. The stock got pounded for a 15% loss on Monday after it gave an ugly earnings warning.)

Previously, Harris saw full-year earnings ranging between $5.10 and $5.30 per share. The company lowered that range by 10 cents per share at both ends. Harris now sees earnings ranging between $5.00 and $5.20 per share. So really, the guidance isn’t that much lower. We have to put this in context of a stock that closed the day on Thursday at $46.20, which is about nine times earnings.

Harris now sees 2013 revenue dropping by 2% to 4%. The previous range was flat to negative 2%. The company blamed the lower guidance on “slower government spending resulting from growing budget uncertainty.” It’s still early in the year, so I’m not giving up on Harris but I want to see some improvement later this year. Harris remains a good buy up to $53.

Moog (MOG-A) also joined the lower guidance club, and like Harris, the news is disappointing but hardly dire. Last Friday, Moog lowered its full-year guidance from $3.50 to $3.70 per share to $3.50 to $3.60 per share.

John Scannell, Moog’s CEO, noted that the company is off to a slow start this year, “The weakness in the major economies around the world is affecting our industrial business. On the other hand, the aircraft market is strong. We have moderated our forecast for the year slightly but we are still projecting growth in both sales and earnings in 2013, despite the headwinds in our industrial markets.” Interestingly, Scannell reflects the same news about lower defense spending that we saw in the GDP report.

Moog’s quarterly revenues were up 3% to $621 million. Net earnings dropped 6% to $34 million. On a per-share basis, Moog made 75 cents last quarter. Since no one follows them, I can’t say if that beat or missed expectations. The stock still looks good for the long-term. Moog is a good buy up to $46 per share.

Profit Machine at Nicholas Financial Continues to Hum

On Wednesday, Nicholas Financial (NICK), our favorite used-car loan company, reported quarterly earnings of 37 cents per share. But the results were distorted by taxes on their ginormous dividend late last year. Not including that, Nicholas earned 43.6 cents per share. Frankly, that’s a bit lower than I was expecting (around 45 cents per share), but not by much. I’m not a fan of NICK’s escalating operating costs, and I hope that doesn’t become a problem.

Our larger thesis for NICK still holds; that the company can rather easily churn out 45 cents per share every quarter. As long as rates are low and the economy is improving, NICK will do well. The math is pretty straightforward. Any company that’s pulling in, say, $1.80 per share per year should be going for at least $15, and possibly closer to $17. I think investors see NICK as a shaky subprime play. It’s not. In fact, NICK has gotten more conservative over the past few years. Like Ford, NICK pulled back below $13. Again, don’t be alarmed. NICK is a solid buy up to $15.

One more late earnings report. After the close on Thursday, CR Bard (BCR), the medical technology firm, reported earnings of $1.70 per share which beat consensus by three cents per share. Bard made $6.57 per share for all of 2012 which is up from $6.40 per share in 2011. I like that kind of growth. The downside is that Bard warned that 2013 will be rough but they see extra-strong growth coming in 2014 and beyond. For now, I’m lowering my Buy Price on Bard to $102.

More Buy List Earnings Next Week

We’re now heading into the back-end of earnings season, and the results have been good so far. The latest numbers show that of 237 companies in the S&P 500 that have reported, 74% have beaten earnings expectations, and 66% have beaten sales expectations.

Next week, we have four more Buy List earnings reports due; AFLAC (AFL), Cognizant Technology Solutions (CTSH), Fiserv (FISV) and WEX Inc. (WXS). I’m curious to hear what AFLAC has to say. Three months ago, they told us that Q4 earnings will range between $1.46 and $1.51 per share. That means full-year 2012 earnings between $6.58 and $6.63 per share. The problem is that AFLAC’s bottom line has probably been squeezed by the low yen. The question how is, how much? AFLAC has said to expect 2013 earnings to rise by 4% to 7% but that’s on a currency neutral basis. I like AFL up to $57.

Cognizant publicly said they expect earnings of 91 cents per share, and their forecast is usually very close. For this year, I think they can make $4 per share. I’m looking to see what kind of guidance they provide for 2013. CTSH remains a good buy up to $83.

Two weeks ago, Fiserv guided lower for Q4 but higher for all of 2013. I think this stock has some room to run. Fiserv is a good buy up to $88. Before I go, I wanted to highlight Microsoft (MSFT). The shares are an especially good buy if you can get them below $28.

That’s all for now. Stay tuned for more earnings reports next week. We’ll also get important reports on factory orders and productivity. Be sure to keep checking the blog for daily updates. I’ll have more market analysis for you in the next issue of CWS Market Review!

– Eddy

P.S. Our old friend Russell Wasendorf, Sr. was just sentenced to 50 years in prison for massive fraud. Here’s our post from this summer on ol’ Russ, and tips for how you can spot financial fraud.

Named by CNN/Money as the best buy-and-hold blogger, Eddy Elfenbein is the editor of Crossing Wall Street. His free Buy List has beaten the S&P 500 for the last six years in a row. This email was sent by Eddy Elfenbein through Crossing Wall Street.

2223 Ontario Road NW, Washington, DC 20009, USA

Benzinga Market Primer for January 18, 2013

Futures Rise on Strong Chinese GDP

•U.S. equity futures rose slightly overnight following the release of China’s fourth quarter GDP.
•The National Statistics Bureau reported that fourth quarter GDP rose at an annualized rate of 7.9 percent, better than the 7.8 percent forecast by economists and better than the 7.4 percent rate of growth seen in the third quarter.

Top News

In other news around the markets:

•Spanish and Italian industrial production dropped precipitously in November. Spain’s industrial production fell 1.5 percent in the month on expectations of a 2.5 percent rise and Italian industrial production fell 0.5 percent on expectations of a 2.0 percent rise.
•Chinese industrial production rose faster than expected in the fourth quarter, alongside GDP, rising 10.3 percent vs. the 10.1 percent estimate of economists. Also, Chinese retail sales rose at an annualized rate of 15.2 percent in December, better than estimates of a 14.9 percent rise.
•Spain’s bad bank ratio rose in November to 11.38 percent from 11.23 percent, more pain for the Iberian economy.
•S&P 500 futures rose 1.10 points to 1,476.80.
•The EUR/USD was was slightly lower at 1.3362.
•Spanish 10-year government bond yields rose to 5.129 percent.
•Italian 10-year government bond yields fell to 4.181 percent.
•Gold rose slightly by 0.02 percent to $1,691.20 per ounce.

Click here for more of Benzinga’s Top News stories.

Asian Markets

•Asian shares were higher overnight following the strong Chinese GDP report and also on strong industrial production data from Japan.
•The Japanese Nikkei Index rose 2.86 percent and the Shanghai Composite Index rose 1.41 percent while the Hang Seng Index rose 1.12 percent.

European Markets

•European shares were higher after a whipsaw open despite the weak Italian and Spanish data.
•The Spanish Ibex Index rose 0.45 percent and the Italian MIB Index rose 0.45 percent as well.
•Meanwhile, the German DAX gained 0.14 percent and the French CAC rose 0.36 percent while U.K. shares rose 0.26 percent.

Commodities

•Commodities were mixed overnight with oil lagging and metals rising. WTI Crude futures fell 0.16 percent to $95.34 per barrel and Brent Crude futures fell 0.08 percent to $111.01 per barrel.
•Copper futures rose 0.25 percent to $367.05 per pound following the strong China data.
•Gold was slightly higher and silver futures rose 0.17 percent to $31.87 per ounce.

Currencies

•Currency markets were much quieter than previous days overnight save for the Swiss franc.
•The EUR/USD was lower at 1.3362 and the dollar fell against the yen to 89.96 after breaching 90 Thursday.
•Overall, the Dollar Index rose 0.15 percent on strength against the euro, the pound, the Canadian dollar, and the Swiss franc.
•Notably, the USD/CHF rose 0.56 percent to 0.9377 and the EUR/CHF rose 0.31 percent to 1.2513, the highest in 22 months.
•Barclays analysts see the EUR/CHF heading towards
•1.3210, the 200-week moving average, over the next few months.
•Also, Swiss media has been reporting that the Swiss National Bank may hike the peg to 1.25.

Pre-Market Movers

Stocks moving in the pre-market included:

•Carnival Corporation (NYSE: CCL) shares rose 1.6 percent pre-market announced that it kept its dividend constant at $0.25 per share.
•Cliffs Natural Resources (NYSE: CLF) shares fell 2.43 percent pre-market as the company announced Thursday that it is set to divest its Brazilian iron ore operations.
•AT&T (NYSE: T) shares fell 1.36 percent pre-market as the company announced that it is taking a $10 billion charge on pension related costs in the fourth quarter.
•Citigroup (NYSE: C) shares fell 0.8 percent pre-market as the company reported earnings that disappointed investors.

Earnings

Notable companies expected to report earnings Friday include:

•Johnson Controls (NYSE: JCI) is expected to report first quarter EPS of $0.51 vs. $0.60 a year ago.
•Morgan Stanley (NYSE: MS) is expected to report fourth quarter EPS of $0.29 vs. a loss of $0.14 per share a year ago.
•Schlumberger (NYSE: SLB) is expected to report fourth quarter EPS of $1.08 vs. $1.11 a year ago.
•SunTrust Banks (NYSE: STI) is expected to report fourth quarter EPS of $0.61 vs. $0.28 a year ago.

Click here for more of Benzinga’s earnings news.

Economics

•On the economics calendar Friday, the preliminary University of Michigan Consumer Confidence survey is due out.

Good luck and good trading.

©2013 Benzinga | 24471 West Ten Mile Rd. | Southfield MI | 48033

Tuesday USD -0.421 NAS +36.63 CRB +1.97 DOW +127.55 Gold +10.380 S&P +14.79

E X T R E M E   M A R K E T   C O M M E N T A R Y
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STOCK INDEXES & MARKETS http://quotes.ino.com/exchanges/?c=indexes+

GENERAL STOCK MARKET COMMENT: The U.S. stock indexes closed
higher again today. The stock index bulls maintain the
overall near-term technical advantage. Tuesday’s fresh
batch of U.S. economic data provided little direction for
the stock indexes. However, that data was not deemed
bearish. The consumer price index and industrial production
and capacity utilization data all came in very close to
pre-report expectations by the market place. So focus is on
corporate earnings reports that are expected to be decent.

In the overnight markets, European Union economic data
released Tuesday showed Euro zone inflation was unchanged
in September, at a 2.6% annual rate. The German ZEW
economic expectations index rose in September, suggesting
less risk for the German economy. The market place is
awaiting the latest GDP report from China, due out
Thursday. EU officials will also meet in Brussels Thursday
to once again discuss the EU debt crisis. The Euro currency
did get support Tuesday on reports Spanish officials are
considering making a formal request to the EU for financial
assistance.

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INTEREST RATES http://quotes.ino.com/exchanges/?c=interest

December U.S. T-Bonds closed down 1 7/32 at 148 7/32 today.
Prices closed near the session low today. Bulls are fading
and are now on a level near-term technical playing field
with the bears. The next downside price breakout objective
for the T-Bond bears is closing prices below solid
technical support at the October low of 147 10/32.

ENERGY MARKETS http://quotes.ino.com/exchanges/category.html?c=energy

ENERGIES: November crude oil closed up $0.18 a barrel at
$92.03 today. Prices closed nearer the session high today
in quieter trading. Trading remains choppy. Prices have
been supported on tensions in the Middle East. However,
bearish demand prospects worldwide are limiting buying
interest. Thus, the choppy trading. Bulls and bears are on
a level near-term technical playing field.

November heating oil closed down 173 points at $3.1919
today. Prices closed near the session low on profit taking.
Prices last week hit a 6.5-month high. Bulls still have the
solid overall near-term technical advantage.

November (RBOB) unleaded gasoline closed down 124 points at
$2.8389 today. Prices closed nearer the session low today
on more profit taking. Problems at U.S. refineries have
helped drive gasoline futures sharply higher recently.
Bulls still have the overall near-term technical advantage.

November natural gas closed down 5.2 cents at $3.434 today.
Prices closed nearer the session low today on more profit
taking after prices last Friday hit a 9.5-month high. Bulls
still have the overall near-term technical advantage.
Prices are still in a five-week-old uptrend on the daily
bar chart.

CURRENCIES http://quotes.ino.com/exchanges/category.html?c=currencies

CURRENCIES: The December Euro
currency closed up 107 points at 1.3056 today. Prices
closed nearer the session high today. The Euro bulls have
the overall near-term technical advantage and regained some
upside momentum today. Prices are in a three-month-old
uptrend on the daily bar chart.

The December Japanese yen closed down 33 points at 1.2682
today. Prices closed nearer the session low and hit a fresh
four-week low today. Bulls and bears are on a level near-

term technical playing field amid choppy trading, but the
bulls are fading.

The December Swiss franc closed up 84 points at 1.0802
today. Prices closed nearer the session high and hit a
fresh four-week high today. The Swissy bulls still have the
solid overall near-term technical advantage and gained more
upside momentum today.

The December Canadian dollar closed down 86 points at
1.0117 today. Prices closed nearer the session low today.
Bulls have the slight overall near-term technical advantage
but faded today and need to show fresh power soon.

The December British pound closed up 38 points at 1.6108
today. Prices closed nearer the session high today. The
bulls have the overall near-term technical advantage.

The December U.S. dollar index closed down 34 points at
79.46 today. Prices closed nearer the session low today.
The bears have the solid overall near-term technical
advantage.

PRECIOUS METALS http://quotes.ino.com/exchanges/?c=metals

METALS: December gold futures closed up $8.50 an ounce
at $1,746.10 today. Prices closed nearer the session high
today and saw short covering and bargain hunting following
recent selling pressure. A weaker U.S. dollar index also
supported gold today. The gold bulls have the overall near-

term technical advantage but need to show more power soon.

December silver futures closed up $0.182 an ounce at
$32.925 today. Prices closed nearer the session high today
and saw short covering and bargain hunting following recent
selling pressure. The weaker U.S. dollar index today also
supported silver. Bulls still need to show fresh power soon
to avoid serious near-term technical damage being
inflicted.

December N.Y. copper closed up 40 points at 370.55 cents
today. Prices closed near mid-range today. Tepid short
covering and bargain hunting were seen. The weaker U.S.
dollar index also limited selling interest in copper today.
Copper bulls still have the overall near-term technical
advantage, but are fading a bit.

FOOD & FIBER http://quotes.ino.com/exchanges/category.html?c=food

SOFTS: March sugar closed up 31 points at 20.16 cents
today. Prices closed nearer the session high today and saw
short covering in a bear market. The weaker U.S. dollar
today was somewhat supportive for sugar. Sugar bears still
have the solid near-term technical advantage.

December coffee closed up 135 points at 162.20 cents.
Prices closed near mid-range today and saw short covering
in a bear market. A weaker U.S. dollar index today also
supported coffee. Coffee bears still have the solid near-

term technical advantage. However, it’s around present
price levels that recent downtrends have been halted.

December cocoa closed up $43 at $2,397 a ton. Prices closed
near mid-range today and saw short covering in a bear
market. The weaker U.S. dollar index today also supported
cocoa. Cocoa prices are still in a five-week-old downtrend
on the daily bar chart. Bears still have the overall near-

term technical advantage.

December cotton closed up 252 points at 74.86 cents today.
Prices closed nearer the session high today and hit a fresh
three-week high on heavy short covering and bargain
hunting. A weaker U.S. dollar index helped to boost cotton
today. Today’s price action in cotton produced a big and
bullish upside “breakout” from the recent sideways trading
range at lower price levels. Bulls have quickly gained
upside technical momentum and have the near-term technical
advantage.

November orange juice closed up 10 points at $1.1240 today.
Prices closed near mid-range again today. Bears have the
overall near-term technical advantage.

November lumber futures closed up $9.70 at $296.60 today.
Heavy short covering and fresh spec buying were featured
today as prices hit a fresh two-month high. Bulls have the
solid near-term technical advantage and gained fresh upside
momentum today.

GRAINS http://quotes.ino.com/exchanges/category.html?c=grains

GRAINS: December corn futures were down 1 1/4 cents at
7.35 3/4 in late trading today. Prices were near the
session low. There were fresh worries in the corn market
today about high U.S. corn prices causing demand
destruction. Corn bulls have faded as prices now are
holding just above key chart support at last week’s low of
$7.32 1/4. A close below that level would open up downside
potential to the $7.00 area. If corn prices can hold above
that key level of $7.32 1/4 then the bulls would begin to
regain upside momentum to still suggest that a harvest low
is in place.

November soybeans were up 4 3/4 cents at $14.97 1/4 a
bushel in late trading today. Prices were nearer the
session low. Bulls are fading and are in trouble. Reports
that South American soybean plantings will be record-large
this year are also bearish for soybeans. Soybean bears have
the slight near-term technical advantage as a six-week-old
downtrend on the daily bar chart is in place.

December soybean meal was down $1.70 at $454.40 in late
trading today. Prices were nearer the session low today and
hit another fresh three-month low. Meal bears have the
slight near-term technical advantage. Prices are in a six-

week-old downtrend on the daily bar chart.

December bean oil was up 49 points at 50.50 cents in late
trading today. Prices were nearer the session high on short
covering. A weaker U.S. dollar index was also supportive to
bean oil today. Bean oil bears still have the solid overall
near-term technical advantage. A six-week-old downtrend is
in place on the daily bar chart.

December Chicago SRW wheat was down 1 1/4 cents at $8.47 in
late trading today. Prices were nearer the session low and
poised to close at a fresh three-month low close. Wheat has
been pressured by the big sell off in corn recently. Wheat
bears have some fresh downside technical momentum as prices
may finally be breaking out on the downside of a sideways
trading range at higher price levels. Bulls and bears are
on a level near-term technical playing field.

December K.C. HRW wheat was down 1 1/4 cents at $8.80 in
late trading today. Prices were nearer the session low.
Trading remains in a choppy and sideways trading range at
higher price levels. However, bears have gained some fresh
downside momentum as prices are at the bottom of the
aforementioned trading range. The HRW bulls still have the
slight overall near-term technical advantage.

LIVESTOCK http://quotes.ino.com/exchanges/?c=livestock

LIVESTOCK: December live cattle closed up $0.72 at
$126.70 today. Prices gapped higher on the daily bar chart
and closed near mid-range today. Short covering and bargain
hunting were featured today. A weaker U.S. dollar index
also supported cattle today. Cattle bears do still have the
overall near-term technical advantage.

November feeder cattle closed up $2.17 at $147.72 today.
The market saw heavy short covering and bargain hunting
today. Recent lower grain prices are also supportive for
feeders. Bulls have gained fresh upside technical momentum
this week and are back on a level near-term playing field
with the bears.

December lean hogs closed up $0.10 at $78.65 today. Prices
closed nearer the session high today and closed at a fresh
2.5-month high close. Hog market bulls have the overall
near-term technical advantage. A five-week-old uptrend is
in place on the daily bar chart.

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E X T R E M E   F U T U R E S
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Updated every 10 minutes around the clock.
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LOSERS

AA.Y$$  BUTTER-GRADE AA Cash                       1875.0     -55.0  -2.85
DA.F13  MILK CLASS III Jan 2013                     19.49     -0.29  -1.47
RR.F13  ROUGH RICE Jan 2013                        15.190    -0.145  -0.95
US.Z12  T-BONDS Dec 2012                        148.18750  -1.25000  -0.84
SM.Z12  SOYBEAN MEAL Dec 2012                       452.8      -3.3  -0.72
LH.K13  LEAN HOGS May 2013                          97.35     -0.40  -0.41
KW.N13  HARD RED WINTER WHEAT Jul 2013             869.50     -0.75  -0.09

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Free Video Seminar – “Spotting breakouts that lead to trend reversals”

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E X T R E M E   S T O C K S
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Updated every 10 minutes around the clock.
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WINNERS

PAMT    PARAMETRIC SOUND                           6.2362 0.8562  +15.91
OMG     OM GROUP                                    19.96      2.25  +12.70
BCOM    B COMMUNICATIONS                             6.79      0.72  +11.86
FSBK    FIRST SOUTH BANCORP                        5.3500    0.5000  +10.31
AEGR    AEGERION PHARMACEUTICALS                    19.15      1.69  +9.68
DFRG    DEL FRISCOS RESTAURANT                      16.42      1.42  +9.47
AESYY   AES TIETE SA                                11.14      0.93  +9.11
AVG     AVG TECHNOLOGIES                            10.86      0.85  +8.49
KYTH    KYTHERA BIOPHARMACEUTICAL                   22.50      1.75  +8.43
GHDX    GENOMIC HEALTH                              35.85      2.75  +8.31

LOSERS

RATE    BANKRATE                                    11.21     -3.29  -22.69
ISIS    ISIS PHARMACEUTICALS                       10.265    -2.885  -21.94
CMRE    COSTAMARE                                  13.650    -1.580  -10.37
BPI     BRIDGEPOINT EDUCATION                        9.85     -1.12  -10.21
BAGL    EINSTEIN NOAH RESTAURANT                    16.11     -1.70  -9.55
PNC.WS  THE PNC FINANCIAL SERVICE GROUP            9.6218   -0.8982  -8.54
DBD     DIEBOLD                                    31.275    -2.465  -7.31
HMD     HB S&P TSX GLOBAL BEAR                       6.43     -0.46  -6.68
REGI    RENEWABLE ENERGY GROUP                       5.04     -0.36  -6.67
WDFC    WD-40                                       47.74     -3.31  -6.45
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T H A N K   Y O U
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Markets on Hold Until Bernanke Speech’s

In another low-volume, low-volatility trading day, equity indices hovered around the flat-line for the twelfth day in a row. Early in the day, European markets were buoyed by comments from German Chancellor Merkel and Italian Prime Minister Monti that after a treaty change, it would be possible for the ECB to extend a banking license to the ESM.

The first revision of the second quarter US GDP report saw a rise to 1.7% from 1.5% on an annualized basis. This was inline with economist expectations. Pending home sales saw a nice boost, rising 2.4% on a monthly basis, beating expectations of 1.0%.

In the afternoon, the Fed’s Beige Book — a breakdown of economic activity in the 12 Fed Districts — showed the economy growing “gradually” during the months of July and April. Overall, this was less downbeat than what many strategists were expecting.

Yelp’s (YELP) stock rose nearly 22% after company insiders were able to sell 53 million shares of restricted stock. The previous amount of stock available for purchase was 8.2 million shares.

In overall stock market action, tomorrow should be a quiet day as we await Friday’s Jackson Hole speech from Ben Bernanke. The US will release initial jobless claims numbers. Expectations are for a decline from 372,000 to 370,000. The US will also release Personal Spending and the PCE Deflator.

Across the pond in Europe, Germany will release its monthly unemployment change and the eurozone will release its monthly consumer confidence poll.

Ciena (CIEN) will report its earnings before market open.

Breakout Continues for Stocks

Breakout Continues for Stocks

On the January 3rd stocks broke above the 200 day moving average and haven’t looked back since. The fundamental reasons to cause this technical breakout should be all the more apparent as we roll down the 4 E’s scorecard.

Europe: Bond rates continue to drop for key nations. Plus the IMF is talking about a new massive $600 billion Euro lending facility. If this comes to fruition it gives greater credence to the belief that European debt problems are being contained.

Economy: Housing Starts and Industrial Production reports showed reason for optimism here in the states.

East Asia (China): Still benefiting from their positive GDP report yesterday.

Earnings: Smattering of mixed reports to date. But few of merit to measure the broader economy. Thursday we get a slate of reports across many industries that will give the first real sense of where we stand.

It is now time for earnings to take center stage and push the other E’s to the background. Simply, if current earnings expectations hold up, then stocks still have ample upside before hitting fair value.

Best,

Steve Reitmeister
Executive VP, Zacks Investment Research