Corporate Earnings Drives Market Higher!

The fears that rose the prior week subsided as corporate earnings stole the show. Last week saw the start of a strong 2nd quarter corporate earnings season that lifted the market 3.5% higher. Quarterly earnings releases will continue for the next two or three weeks, but early signs suggest the majority of reports will continue to beat expectations. The market rallied this week on the strength of those reports. Corporate earnings are the best barometer for how the economy is doing and what to expect from the recovery. Despite all of the negative press from recent weeks, corporate earnings indicate that the market and economy are showing signs of recovery. Jobs growth, which has been the Achilles heel of consumer confidence, will remain sticky, but there are signs that too will begin to improve. The stock market remains tenuous, as short term technical trading drives the market creating higher volatility than is normal for summer months. Trading volumes have been very light which magnifies to the market gyrations. Money flows into stocks improved this month, but remain at low levels. As a result of these headwinds, we expect the market to continue range bound trading over the near term (between 1040 and 1120). Longer term the market will move higher as corporate earnings clearly point to an improving business climate.

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

What Stock Tips do we have? We added a number of new stocks to our buy list in light of the recent market strength due to the resurgence of street beating corporate earnings. Rolls Royce (RYCEY, Aerospace), Xilinx Inc (XLNX, Semiconductors), Altera Corp (ALTR, Semiconductors), EBIX (Software & Programming), and Credit Acceptance Corp (CACC, Financial Services) were all added this week. Erie Insurance (ERIE, Insurance), Full House Resorts (FLL, Casinos & Gaming), PAR Pharmaceutical (PRX, Biotechnology & Drugs), and Kulicke & Soffa (KLIC, Semiconductors) remain on our buy list from the prior week. The number of stocks carried on our buy list grows as the market shows more momentum. Semiconductor companies make up the highest numbers of stocks on the watch list and our favorite is Altera. Xilinz and Kulicke are also very good choices in the semiconductor space, but these two stocks tend to show more volatility. We also like Full House Resorts, a casino operator that carries more risk, but has the potential for a big payout. Full House Resorts operates several gaming facilities including one near my home roots in Harrington Delaware. All in all, look for range bound trading in the market over the near term. This is a good time to buy stocks for the long term, but be mindful that we could still experience short term volatility. We still expect the market to finish the year with positive gains. Now is also an excellent time to employ income producing strategies in the options market.

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