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What the Market Wants: Bah! Humbug!

Posted on the 19 December 2011 by Phil's Stock World @philstockworld

Bah! Humbug!

By David Brown, Chief Market Strategist, Sabrient Systems

What the Market Wants: Bah! Humbug!
The market is taking on a Dickensian atmosphere for the holidays!  The S&P is down another 1.2% today–well into the abyss at 1205.  Other major indices had similar figures.  Materials and Financials were the worst of the lot, down more than 2% a piece.  Oil fell nearly 2%.  What doth the market want?  Not much it seems.

It really wasn’t a week of utter despair.  Initial jobless Claims fell to 366K, its best reading of the year, a 40+ month low.  The Empire State Manufacturing Survey improved well above the expected 3.0 to 9.5, while the Philly Fed reading at 10.3 handily beat expectations of 4.5.  But early week retail sales report for November was a big disappointment up just +0.2% versus an expected gain of +0.6%.  Industrial Production on Friday declined -0.2% against an expected gain of +0.2% to close the week on a negative note.  IP has been slowly but steadily recovering since earlier this year.

Overseas, the Euro fell well over 2% as the malaise over sovereign debt continued with no end in sight for the overall European crisis.  The rating firms didn’t help by lowering ratings on several large European banks and added insult to injury by downgrading Bank of America, which closed below $5 today, and Goldman Sachs.  No Virginia, there is no Santa Claus.  Even Goldman Sachs gets coal, stones and switches for Christmas.  Even Intel brought sad greetings with its Scrooge-like outlook.  Is 1.85% really the best we can get for buying 10 year treasury bonds?  This week it was.

The rest of the week?  Maybe Santa is saving the best for the last as he arrives on Friday with the durables goods report, personal income, personal spending and existing home sales.  Or will it be the Grinch on Christmas Eve?

Market Stats. Last week was abysmal for the market with Small Cap Growth falling more than 4%.  Its counterpart, Small Cap Value, was the best losing just over 2%.  It was clearly a flight to safety with the classics faring the best.  Utilities, Health Care and Consumer Non-Cyclicals, were each down, but down less than any other sector.

Here are the market stats.

For your Christmas list we suggest well priced stocks with strong growth outlooks and patience.  A hedge wouldn’t hurt although the VXX was down 2.36% today while the VIX rose 2.59%, which is an anomalous performance. The VXX has been known to have this type of performance around options expiration or time of low volume.

3 Stock Ideas for this Market

This week, I used the GARP (growth at a reasonable price) preset search in MyStockFinder ( I also included Buys, in addition to Strong Buys. Here are three stock ideas that look intriguing:

Comp En De Mn Cemig ADS America (CIG) – Utilities
Smithfield Foods Inc. (SFD) – Non-Cyclical Consumer
Avnet Inc. (AVT)—Technology

Until next week,

David Brown
Chief Market Strategist
Sabrient Systems, LLC.
Leaders in Investment Research
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Full disclosure: The author holds no positions in this week’s “stock ideas.”

Disclaimer: This newsletter is published solely for informational purposes and is not to be construed as advice or a recommendation to specific individuals. Individuals should take into account their personal financial circumstances in acting on any rankings or stock selections provided by Sabrient. Sabrient makes no representations that the techniques used in its rankings or selections will result in or guarantee profits in trading. Trading involves risk, including possible loss of principal and other losses, and past performance is no indication of future results.

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