Stockscom
Report for
Publisher: Colin Alexander Editor: Ken Wilson (450-691-4617)
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Market Synopsis
The perception of a soft patch in the economy during the first quarter of 2005 is being laid to rest with the release of broad indications this past week. The new data has prompted economists to reconsider the potential for a slowdown with housing starts up a fraction but starts of new single-family homes in May were up an impressive 4.7% demonstrating that if nothing else, residential construction remains undeniably strong. Though some consternation was noticeable with the drop of 4.6% in building permits in May, it should be noted that April’s data showed a rise in building permits of 6.3% offsetting the loss in May.
On the inflation front, the PPI, or
wholesale inflation, recorded a decline of 0.6% in May (core +0.1%) while the
CPI, or consumer inflation, dropped 0.2% (core –0.1%) as sharply reduced energy
costs in May
All was not rosy however and there were some potholes in the various reports this week. Among them was the retail sales report, which showed a significant drop of 0.5% for the month of May and this was the first such drop since August. Economists seem little concerned by the fall, as weekly retail data in June has been displaying some form of rebound. Perhaps more important were the numbers from the NY and Philly Fed indexes. Truly a tale of two cities with the NY Fed showing a slightly positive environment contrasting with the Philly Fed, which described the current manufacturing environment as recessionary.
Probably the most watched data figure this week would be Friday’s release of durable goods orders for the month of May. This has the potential to show solid evidence of a rebound in US factories supporting the recent claims that the soft patch is over. Also, Monday’s announcement on the Leading Economic Indicators could also provide an early indication of a shift in production numbers. What we will not see in this data is how the current increase in the cost of energy is affecting both consumption and production.
Technically Speaking
There has been a mild shift in leadership this week with the Nasdaq faltering somewhat while the DJ and the SP500 continue to sport near daily up moves. Both of the broader indexes marked significant gains this week in addition to the technical moves, which added considerable strength to their respective charts.
In the case of the SP, the overlying resistance at the 1215 level was effectively negated by week’s end with the close at 1216 and Friday’s range included a high of 1219. On the DJ-30, the 10,600 was surpassed and similarly, this level had represented certain resistance on its climb.
As for ND, for the third week in a row, it failed to top the 2100 level, which as a result, is strengthening resistance along this boundary. Turning down once more would add to the technical resistance and likely put an end to the ND rally begun in April.
New Buy Recommendations:
None.
New Short Sales
None.
Stock Positions to Sell/Exit:
None.
Portfolio Comments:
New stops have been added to the list while others have been modified. Those that have blanks, are being carried unstopped for now. Please see our complete list of stops in the table below.
List of Current Stock Recommendations:
Action Ratings. The following is the legend for designating immediate action
for our stock recommendations. The first is B, meaning the stock is timely
to buy but the case for doing so right here is not overwhelming. Either the
stock may have gotten ahead of itself and may be vulnerable to a retracement or
else the stock has been performing disappointingly but may simply be
regrouping. B+ and B++ indicate stocks for which there is a technical case
to buy now, with plusses adding weight according to how many there are, up
to a maximum of two. Stocks rated H are ones to hold, awaiting confirmation
to buy more or to sell. SELL, of course, means what it says. It seldom pays
to override this designation. In the case of stocks held short, the rating is S
where positions should be retained. S+ and S++ indicate stocks for which there
is a technical case to add to the positions with plusses adding weight similar
to long positions. The maximum number of plus signs is 2.
Please take note that the following clause
is being removed under the assumption that the aforementioned federal budget in
[Stocks marked # are eligible as Canadian content in Canadian RSP funds.
Otherwise there is a 30 percent restriction on foreign stocks held in these
accounts.]
|
Date of Entry |
Name |
Symbol |
Entry Price |
Current Price |
Stop |
Action Rating |
|
|
Air T Inc |
AIRT |
17.63 |
16.93 |
13.64 |
SELL |
|
|
Aleris International |
ARS |
22.65 |
24.19 |
|
B |
|
|
Canadian Nat Res. |
CNQ *** |
28.47 |
36.82 |
|
B |
|
|
Captiva Software |
CPTV |
14.03 |
14.65 |
13.00 |
B |
|
|
|
GILD |
39.58 |
45.49 |
34.50 |
B |
|
|
Humana |
HUM |
36.30 |
39.42 |
|
B |
|
|
|
HTCH |
37.00 |
39.52 |
38.00 |
B |
|
|
Novatel |
NGPS |
28.09 |
28.12 |
|
H |
|
|
Orckit Comm. |
ORCT |
27.09 |
26.61 |
|
H |
|
|
Pacificare Health |
PHS |
62.60 |
67.16 |
|
B |
|
|
Sun Hydraulics |
SNHY |
35.88 |
37.35 |
|
B |
|
|
Transcanada Corp |
TRP |
21.34 |
25.86 |
23.25 |
B |
|
|
Verisign Inc |
VRSN |
29.24 |
32.95 |
29.50 |
B |
New stops in BOLD
* Stop on a closing basis
** Buy if above entry price
*** Split-adjusted price