Wow, what a difference a week makes. The market rebounded last week rising 5.4% for the best weekly gain in a very long time. What were the catalysts for such a large move? We find this performance very interesting as the economic fundamentals changed very little from the week before. Furthermore, 2nd quarter earnings season does not start until next week, so corporate news could not be the catalyst. Retailers did report June same store results, but frankly those results were mixed and the retail sector overall did not participate in the rally. Unemployment claims declined, but only slightly so that too could not account for the advance. The IMF revised upward their forecast of 2010 world growth to 4.6%, an encouraging sign but probably not the major driver. Our conclusion, the market was simply rebounding from extreme pessimism and oversold conditions. By the end of the prior week, pessimism and fears over a double dip recession drove the market down to oversold lev els. Once the market caught its breath and began to rise, the many shorts got squeezed which helped accelerate the rally. We do not expect a double dip recession; in fact those occurrences are extremely rare over our long history. Instead we see a return to stability, although the recovery could be slower than what we have experienced in past recessions particularly given the sluggish recovery in housing and what will likely be anemic job growth over the near term. Nonetheless, this is a good time to buy stocks as most valuation measures remain attractive. Since the start of the recession, there has been a massive flight to safety which frankly has caused a bubble in US Treasuries with yields moving nearly to zero. This bubble and flight to safety will not last as all bubbles come to an end. At some point, money will flow back into equities and those flows will accelerate as the investor appetite for risk grows. We think the market is establishing support at the curr ent levels and expect the market to finish higher by year end. However, some caution is in order over the near term given the strong market surge last week. We could get a pullback next week, but if we do, treat that as a good buying opportunity. Buying on dips should be the mantra for the remainder of the year.
Momentum And Value (MAV Screen): Breakout Stocks To Buy!
What Stock Tips do we have? For this week, we added several stocks to our Breakout list. We now have seven new stocks on our watch list. The market is changing sentiment and direction and with that we are looking for new leadership. The seven new stocks are Erie Insurance (ERIE, Insurance), Cyberonics (CYBX, Medical Equipment), Coca Cola (KOF, Beverages), Astrazeneca (AZN, Biotechnology & Drugs), Full House Resorts (FLL, Casinos & Gaming), PAR Pharmaceutical (PRX, Biotechnology & Drugs), and Kulicke & Soffa (KLIC, Semiconductors). We like the potential in all these stocks and we like the industry diversity that is showing on our stock screens. That means the stocks advancing have been across the board and that breadth provides conviction to the strength of the market advance. KLIC and PRX have already advanced 11% and 7% respectively since we added to our buy list during the week. Investors may want to wait for a pullback or longer consolidation period before jumping in on these two stocks. We really like KLIC, but do not want to chase it, and plan to jump in when there is temporary pricing weakness.
Get Daily Updates On Breakout Stocks From: http://www.marketbeatingstocks.com
