Second Straight Weekly Gain!

The market ended the week 2.4% higher for its second straight weekly gain. All in all it was a quiet week with the exception of the Tuesday rally. Economic news was light and trading volatility was subdued. The pundits are pretty divided on whether there will be a sustained uptrend following the recent correction or whether this will be just another sucker’s rally. Europe certainly put a scare into the market over the past month, but those fears appear to have been absorbed by the market. The ongoing oil spill is causing heartache and perhaps is acting as a distraction from the other concerns. In our view, the economy is improving ever so slowly. We expect the market to finish with positive returns at the end of the year, but do not expect huge gains. A return to slower market growth over the next six months would be a good thing allowing the economy to catch up and valuations to stay reasonable. We continue to believe that this is a good time to buy stocks. In other words, our expectation is a sustained uptrend to finish the year in positive territory. Volatility will remain at higher than normal levels, but absent those inevitable spikes, will trend downward from current levels through the remainder of the year.

Momentum And Value (MAV Screen): Breakout Stocks To Buy!

What Stock Tips do we have? For this week, we have cut our Breakout list to four stocks. Amerigroup (AGP, Healthcare Facilities), LaCrosse Footwear (BOOT, Footwear), Clearwater Paper (CLW, Paper Products), and APAC Customer Services (APAC, Business Services) remain on our list from the prior week. We wrote about APAC in our last newsletter. Since that writing the stock has come under selling pressure, and now represents an opportunity for investors to get in at a discount. APAC should do well as the business environment begins to heat up. We dropped Delta Apparel from our list as the stock has declined sharply over the past two weeks. Retail stocks in general have been hit pretty hard, but Delta was down more than most. No need to buy stocks that are losing momentum, when there are plenty of other stocks moving in the right direction. Volatility has been sharply higher over the past month but is showing signs of declining. Our stock screen is sensitive to sharp stock price declines that have occurred over the prior 4 weeks. That means fewer stocks will make the cut and appear on our screen until stock prices begin to stabilize. We believe the turning point is near and our screen should begin to show more stock buying opportunities. We designed our screen to leave some money on the table and buy after stocks begin to move back up, rather than buy too early and experience more set back. Overall, we think the market is beginning to establish the required support levels. The pressures from overseas markets and technical trading appear to be moderating. We think this is an excellent time to buy equities.