Uptrend Continues in Anticipation of Quarterly Earnings

The market continued its advance rising 1.4% last week. Year to Date, the S&P Index is now up 7.1%, a very good showing for the first three months of the year. We have been a bit cautious over the past few weeks knowing that a short term correction was a possibility. That cautiousness has kept us in more cash than what we would typically hold. We are growing less cautious and remain optimistic that 2010 will be an up year. We are now looking at first quarter earnings as the big driver that will influence the short and long term market direction. Generally speaking, if the majority of earnings reports are positive, the market will likely continue its strong advance. We plan to become fully invested over this period assuming that earnings season is not a disappointment. Another big driver, is the cash sitting on the sidelines. Overall trading volume remains low despite the market advance this year. That is unusual as higher trading volumes usually correspond with market advances. We think lower trading volumes suggest that significant cash is sitting on the sidelines or in investments other than stocks. At some point, some of this money will return to the stock market as investors search for higher yields and their appetites for risk grow over time. We think the volume on new money coming into the market will grow significantly over time, and with that will come big market returns.


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


What Stock Tips do we have? Delta Apparel (DLA, Apparel), Universal American (UAM, Insurance), PHH Corp (PHH, Consumer Finance), SYMS Corp (SYMS, Apparel), American Eqty Invt Life (AEL, Insurance) and Rosetta Stone (RST, Software & Programming) remain buys from our Breakout list published last week. We purchased stock in Maidenform Brands and Summer Infant last week so we have removed them from our breakout lists of stocks to buy. For investors that do not already own stocks, now is an excellent time to buy. We have added one stock to our breakout list, Del Monte Foods (DLM, Food Processing). Del Monte stock is now showing again on our buy screens. Some of our subscribers may remember that we bought and sold Del Monte stock last year for large gains. Buying stocks that we have sold in the past is not unusual, and is just a sign that momentum has recently returned to the stock. Del Monte is a good case in point. Momentum has taken DLM up more than 30% over just the past three months. The stock remains reasonably valued and operating margins are sound. Clearly interest in the stock is pushing up the price, and now may be another good time to buy Del Monte stock. Our overall strategy is to look for stocks to buy that show strong momentum and value. Momentum is the timing indicator that helps identify when to buy stocks. We look to for stocks that are already moving up in price as opposed to those that have not yet started to move. It can take several months or even longer for a stock to begin rising from a narrow trading range or support level. That time sitting represents dead money, and is why our strategy of buying momentum really earns in weight in gold! In short, our goal is to buy high and sell higher, a strategy that has been very successful for us as our results bear out.