With Fed rate hikes priced into the market for the most part, traders are beginning to turn their attention to the economy. With the meat of earnings season fast approaching we should get a good idea just how fast the economy is cooling. On Friday, traders initially liked the fact that the jobs number came in lower than expected as premarket trading had the indexes up, but ultimately felt that it was a sign the economy may be slowing too quickly. Combine that with a warning out of 3M and by the end of the day, the market had sold off on increasing volume. Not the kind of action you want to see following a market rally. If 3M is any indication of what’s to come this earnings season, we’re in for a long summer… er should I say a "short" summer.
In the Model Portfolio last week, (only available to premium members) I made just one transaction in the holiday shortened week. On Friday, I closed the Quick Strike Profit play in Open TV Corp. (OPTV) at 3.76 for a small loss. I’m currently long 15% with 3 positions (all showing a gain), short 5% (one position that is down 3%) and the rest in cash. The portfolio continues to hover around a 15% gain year to date. Considering I rarely hold a stock through its earnings report, earnings season is typically a time when I don’t hold many positions. The strategy paid off big last quarter when I began to liquidate positions around the middle of April ahead of earnings reports.
** Best/Worst Performers **
– Top 10 Performing Industries For the Week –
1. Major Airlines 4.45%
2. Cigarettes 4.02%
3. REIT – Residential 1.90%
4. Aluminum 1.88%
5. REIT – Diversified/Industrial 1.71%
6. Major Integrated Oil/Gas 1.70%
7. Toy & Hobby Stores 1.65%
8. Regional Airlines 1.62%
9. Medical Laboratories/Research 1.10%
10. Cement 1.00%
– Top 10 Worst Performig Industries For the Week –
1. General Building Materials -6.10%
2. Catalog & Mail Order Houses -6.05%
3. Semiconductor – Integrated -5.40%
4. Internet Software & Services -5.20%
5. Sporting Goods Stores -4.40%
6. Resorts & Casinos -4.35%
7. Drugs – Generic -4.35%
8. Specialty Eateries -3.77%
9. Pollution & Treatment Controls -3.75%
10. Music & Video Stores -3.75%
– Top 5 Best Performing ETFs For the Week –
1. Turkish Invest FD (TKF) 5.95%
2. Ishares Mexico (EWW) 4.60%
3. Mexico Fund (MXF) 4.40%
4. Central Fund of Canada (CEF) 2.67%
5. Ishares Gold (IAU) 2.40%
– Worst 5 Performing ETF’s –
1. India Fund (IFN) -4.70%
2. Powershares Dynamic Semi (GLD) -4.70%
3. HLDRS Broadband (BDH) -4.55%
4. Japan Small Cap (JOF) -4.50%
5. HLDRS Internet (HHH) -4.40%
** IPO’s Set to Launch This Week **
1. Cowen Group (COWN): New York based financial services firm dating back to 1918 – it’s an investment bank providing research, sales and trading, and invesment banking services to companies and instiutional investor clients primarily in the healthcare, technology, media and telecommunications, and consumer sectors. Starts trading Thursday.
2. Allied World Assurance Holdings (AWH): Bermuda based specialty insurance and reinsurance company underwriting property and casualty insurance and reinsurance lines of business through its operations in Bermuda, the US, Ireland and the UK. Sales were flat in the past year while earnings were up about 50%. Trading set to start on Wednesday.
3. Valero GP Holdings (VEH): San Antonio based limited partner, which owns Riverwalk Logistics, the general partner of Valero, a publicly traded partnerhip. Both sales and earnings have vaulted around 50% in the past year. Set to start trading on Friday.
** Upcoming Economic Reports (7/10/06- 7/14/06) **
Monday: Consumer Credit, Wholesale Trade
Tuesday: Economic Optimism, Retail Chain Store Sales
Wednesday: Trade Balance, Petroleum Status, Mortgage Apps Survey
Thursday: Treasury Budget, Money Supply, Jobless Claims
Friday: Import Price Index, Consumer Sentiment (prelim.), Retails Sales
Business Inventories