Stockscom Report for
Publisher: Colin Alexander Editor: Ken Wilson (450-691-4617)
Subscriptions and Administration: Pierre Fichaud (toll-free:
·
Losses are trimmed – rebound
continues
Market Synopsis
Markets are in a holding pattern until Thursday of this week when the FOMC led by Federal Reserve Chairman Ben Bernanke will decide on interest rate policy for the next few weeks and outline their interpretation of the economic data that has been released of late. While it is largely a given that they will opt for a quarter point increase in the overnight rate, investors will want to listen carefully to the communiqué for clues related to their intentions for the early August meeting when interest rate policy will once again be on the agenda. And it is the anticipation of a shift in policy that has many investors and analysts on edge.
The not-so-media-savvy Bernanke has already managed to confuse the markets with his comments causing broad negative reaction in the stock market, for if it is one thing that markets hate, it’s confusion. The former Chairman Alan Greenspan developed a talent for obfuscating the news-hungry media in his commentary and undoubtedly, Ben Bernanke will develop an equally adept talent. One characteristic that the new Fed Chairman must immediately possess is the ability to communicate his main talking points including his broad ideas of where interest rate policy is heading in the short term without actually identifying that point. Obviously, the Fed Chairman is not at liberty to reveal the exact interest rate assuming that he had one that he is targeting however he should supply the news media with enough information to allow them to closely determine what it could be.
Recently, we’ve seen a spate of Fed Reserve bank presidents giving speeches containing a hawkish tone that has served to correct Bernanke’s earlier miscues, clarify the Fed’s intentions and given credibility to Bernanke’s later comments. But the question remains that few people have any idea what to expect from the Fed in August. The latest reports suggest strongly that the economy is hitting a rough patch despite the current elevated risk of inflation. While core inflation trends have become “unwelcome”, the dip in the ISM Purchasing Manager’s report, the Conference Board’s index of consumer confidence, and the Fed’s own Beige Book indicate that the economy is slowing down.
The lag effect of higher interest rates on inflation can take up to two or three years to be felt and consequently the current inflation is a result of interest rates of 1% not the current 5%. Recognition of this concept could go along way in avoiding overshooting on interest rates.
Technically Speaking
There was very little change in the market’s character over the past week and, until Thursday, we expect there to be only quiet moves on lower than normal volume as traders position themselves before the Fed reveals what they’re doing for the summer.
New Buy Recommendations (in order of preference):
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.
N.B. There are no longer restrictions on foreign stocks held in Canadian retirement savings accounts.
|
Date of Entry |
Name |
Symbol |
Entry Price |
Current Price |
Stop |
Action Rating |
|
|
First |
FMD |
48.85 |
56.48 |
47.85 |
B
|
New stops in BOLD
* Stop on a closing basis
** Buy if above entry price
*** Split-adjusted price