Stockscom Report for
Publisher: Colin Alexander Editor: Ken Wilson (450-691-4617)
Subscriptions and Administration: Pierre Fichaud (toll-free:
·
Fed keeps overnight rate
steady at 5.25%
·
Santa Claus rally time
Market Synopsis
Tomorrow begins the last full trading week of the year and since this is the lead up to a holiday, we would normally expect a bullish movement however this is not just any holiday but rather it’s Christmas. The often-discussed Santa Claus rally isn’t simply a mild seasonal trend; it is a very reliable upward movement in stock prices that has occurred in 65 of the past 78 years for the period of Dec 13 to Dec 31. Seasonality indeed counts for something at times such as this.
Anticipation is high that a turn is occurring in the economy from the slowness witnessed over the past few months. Data to be released this week is expected to show that expendable income has moved higher after the CPI was reported as flat in November. Retail sales were much stronger than expected when reported this past week but the most anticipated number is the durable goods orders, which is expected to be released this coming Friday. Unfortunately, the overall number can swing to extremes as aircraft orders have a pitiless effect greatly altering this number however once the transportation is stripped out, a reliable picture of the need for capital equipment becomes apparent.
This past week, the Federal Reserve chose to stand pat on interest rates extending the current pause and this decision combined with the flat consumer inflation figure from November drove future expectations of rate hikes down. In their communiqué the Fed however, emphasized their vigilance toward inflation and this may become an issue in the near future due to oil prices. Although crude oil has fallen sharply from the $81 area in July, the past two months has seen oil building a firm base in the area of $58 to $62 and the last three weeks we’ve observed a renewed bullishness in crude, which could manifest itself in a new spike higher.
Technically Speaking
As we noted above, the probabilities favor a continuation of the upward momentum that we’ve seen given that this is the season for a Santa Claus rally. This week’s moves on the large cap indexes accompanied by heavier volume was a jolt for the market bulls and caused bears to run for cover. By the end of the week we saw the Nasdaq-100 complete a Lindahl buy signal on the weekly chart joining the Dow Jones, the S&P-500 and its brother, the Nasdaq Composite, which all had generated the same signal the week before. Adding further strength to the bullish wave this week was the follow through strength of these latter three indexes as they all had solid moves higher paving the way for individual stocks to rise.
New Buy Recommendations (in order of preference):
None.
New Short Sales
None.
Stock Positions to Sell/Exit:
We sold FRG and MNG on their respective stops. Gold which had appeared so strong in recent times has been affected by selling partly due to funds taking profits late in the year and partly due to the recent strength in the US dollar with which it has an inverse relationship.
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 |
|
11/27/06 |
Actions Semi |
ACTS |
9.28 |
8.64 |
8.20 |
H
|
|
11/06/06 |
Allis-Chalmers |
ALY |
17.80 |
24.09 |
19.50 |
B
|
|
10/23/06 |
Coca-Cola Co. |
KO |
46.75 |
48.93 |
46.00 |
B
|
|
09/25/06 |
Cognos Inc |
COGN |
35.20 |
42.01 |
38.00 |
B
|
|
12/11/06 |
Credence Systems |
CMOS |
5.02 |
5.02 |
4.50 |
B
|
|
11/06/06 |
Fronteer Dev’t Grp |
FRG |
7.98 |
8.25 |
8.25 |
SOLD |
|
10/02/06 |
Global Payments |
GPN |
43.80 |
47.21 |
41.50 |
B
|
|
11/13/06 |
Goodyear Tire |
GT |
18.00 |
19.20 |
17.00 |
B
|
|
10/23/06 |
I-Flow Corp |
IFLO |
15.02 |
14.76 |
13.50 |
H
|
|
12/11/06 |
Investment Tech. |
ITG |
43.87 |
43.33 |
41.80 |
H
|
|
12/11/06 |
Isis Pharma. |
ISIS |
12.53 |
12.04 |
10.50 |
H
|
|
10/30/06 |
Millennium Pharm |
MLNM |
11.58 |
11.53 |
10.50 |
H
|
|
10/16/06 |
Miramar Mng Corp |
MNG |
4.87 |
4.50 |
4.50 |
SOLD |
|
10/02/06 |
NII Holdings |
NIHD |
62.27 |
68.46 |
65.00 |
B
|
|
11/13/06 |
NYSE Group |
NYX |
96.50 |
98.05 |
90.00 |
B
|
|
11/06/06 |
Syntax-Brillian |
BRLC |
7.98 |
9.39 |
8.00 |
B
|
|
11/06/06 |
Watts Industries |
WTS |
41.25 |
41.33 |
37.75 |
B
|
New stops in BOLD
* Stop on a closing basis
** Buy if above entry price
*** Split-adjusted
price