Market Ends Flat Under Weight Of Middle East Turmoil!

The market ended the week flat under the weight of ongoing turmoil in the Middle East. Libya remains front and center as the growing unrest becomes more violent. Oil prices moved higher as a result of that regional tension and fears over supply constraints. However, the US economy is the silver lining. Reports indicate money flows are showing a reversal from emerging markets which was king to US based investments. We have mentioned the importance of watching money flows in the past, and this is another bullish sign for the US stock market as increasing demand will driver prices higher. The other good news was unemployment, as private employers added more jobs than expected, helping to lower the overall unemployment rate. Economic indicators continue to support the premise that the US economy is slowly on the mend. Rising oil prices do put pressure on consumers, but we think a far greater rise is required before those effects dampen the economic recovery. As we said l ast week, we think the market could struggle over the near term with sideways trading or a small correction, but longer term we remain bullish for the rest of this year. Now is not the time to run to cash, but taking some profits is practical and smart. Reinvest your cash over time to let the market work through the current fears and establish support levels. We put some cash to work last week with the purchase of ConocoPhillips stock. Rising oil prices will juice performance for Conoco, but we think the stock can do well even if oil prices level off. The stock trades at a PE of just 10 which offers some downside protection, a great value in light of 30% sales growth over the past 12 months. Conoco is a quality company with an outstanding Return on Equity that is currently selling at a discount. We also took some profits last week after selling our positions in Amerisource Bergen (35% gain) and EBIX Systems (15.7% gain). We still like Amerisource as a long term play, but we only look to hold stocks for 1 year or less. The shorter holding period allows us to maximize portfolio returns by focusing only on those stocks that are showing the strongest momentum over 3 and 6 month periods. We had been looking to sell EBIX stock for some time and were happy to get out with a 15.7% gain. EBIX had been far more volatile than expected over our holding period and just not worth the additional risk.

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

What Stock Tips do we have? Our complete list of watch list stocks can be found on our website, see the link below. This week we are adding two new stocks, Novellus Systems (NVLS, Semiconductors) and Teradyne (TER, Semiconductors). Both are semiconductor stocks, so be careful with allocations to ensure proper diversification across your portfolio. We try to limit our industry exposure to 20% or less for the stocks we own across our portfolios. Teradyne is a supplier of automatic test equipment that supports the testing of complex electronics across the automotive, computing, telecommunications and defense industries. TER is up strong over the past three months, but has been consolidating the past two weeks as the overall market has struggled. The stock trades at a PE of 11, despite triple digit growth in sales and earnings. Industrial demand is picking up and that will translate into incremental demand for Terady ne products. Novellus develops and sells equipment used in the fabrication of integrated circuits. The semiconductor space is one of the fastest growing sectors right now and that bodes well for Novellus. The stock price has been on a steady upward trajectory and sports a PE of 15 with triple digit growth rates. There is more room to run on this one in light of what we see as steadily increasing industrial demand. We plan to look at options as another way to play our bullish outlook on Novellus. Overall, we are still cautious over the near term in terms of a correction, but would view that as a great buying opportunity if that unfolds. We do plan invest more of our cash in the coming weeks.

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