Stockscom Report for
Publisher: Colin Alexander Editor: Ken Wilson (450-691-4617)
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Fed keeps rate at 5.25%
Market Synopsis
The Federal Reserve chose to pause in its series of interest rate increases this week leaving the key overnight lending rate at 5.25% as the majority of voting members clearly agreed that though inflationary pressures were existent, a moderation in economic growth would have a dampening effect on these pressures. A significant development nonetheless was the dissenting opinion from the Richmond Fed President Jeffrey Lacker becoming the first dissenter in the Ben Bernanke-led Fed.
The pause in the hike was accompanied by a hawkish statement signaling that the Fed would be quite prepared to raise interest rates again if it deemed that the economy failed to slow down sufficiently. And by Friday there were indications that the economy was perhaps not cooling down as quickly as the Fed had hoped. Retail sales in July were higher by 1.4% as durable goods especially automobiles were in demand. The July figures were the highest of the past six months and even with autos subtracted, the rate remained at 1.0%.
However the events of the past few days will undoubtedly impact consumer spending as once again the threat of terrorist attacks will impede some discretionary travel. Airlines are attempting to cope with the new rapidly changing regulations and the long delays associated to the security checks will result in fewer travelers over the next few weeks.
Technically Speaking
Equities remain weak as the geopolitical
situation in the
Trading volumes have essentially dried up as investors take their vacations or simply ignore the market patiently waiting for some resolution to the current situations that exist. The broader markets, namely the Dow Jones and the S&P 500 are holding well above their June/July lows with the Dow going one step further by holding above its 200-day moving average – a notable achievement given the environment that we find ourselves in. For now our attention is on the July lows and whether or not they are violated.
New Buy Recommendations (in order of preference):
None.
New Short Sales
US Steel Corp. (X) – Sheet steel products are expected to see declining demand over the next several months as new capacity comes on line in time to potentially meet an economic slowdown. US Steel’s production is 95% sheet steel and this represents 67% of profits so the impact will be anything but small. Technically, X began breaking down after peaking in May however Friday’s move below the 200-day moving average is ultimately a key indication of further breakdowns expected. The move on Friday was also remarkable for having reversed the gain from the day before and for touching an intraday low not seen since March.
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 |
|
|
Seabridge Gold |
SA |
12.11 |
13.43 |
11.00 |
B
|
Short Sales:
|
Date of Entry |
Name |
Symbol |
Entry Price |
Current Price |
Stop |
Action Rating |
|
|
Ebay |
EBAY |
26.92 |
24.20 |
26.00 |
S
|
|
|
Getty Images Inc |
GYI |
57.60 |
44.96 |
50.00 |
S
|
|
|
Red Hat Inc |
RHAT |
23.37 |
22.47 |
25.50 |
S
|
New stops in BOLD
* Stop on a closing basis
** Buy if above entry price
*** Split-adjusted price