That Was The Week That Was-1st Week January

  Investors greeted the new year expecting the worst but were pleasantly surprised as stocks jumped to an early lead Tuesday and gave up some ground but overall a healthy beginning to the New Year +179 on the Dow. Oil and Gold also up as investors perked up their first day back from vacation. Still skeptics abound even as some company analysts upgraded stocks mid-day to add fuel to a very good day indeed.

Odds 2012 Finishes Higher when 1st Day is positive 64%!

Gold was up $38. the largest pop in price since November – shares of the ETF GLD traded at $156. Many questions if gold had bottomed over the holidays and was getting ready to run. Jon Najarian on CNBC said he’d be a buyer of etf GLD at $149.00

Rare Earth- Molycorp UP 4.3% after being declared dead last week by traders and analysts. The company announced that it had secured long term contracts with customers before the company starts its California plant. China is a major buyer and holder of rare earth materials which are used in a number of electronic applications.

 

Chris Rowe at the Tycoon Report writes on Tuesday that stocks are poised to continue higher for the intermediate term. He gives the technical applications using both the 20 and 40 week moving averages. Some cautious technicians use the 300 day average but most locked into using 200 & 50 day moving average. (the simplest form of technical analysis).

SEC sues Life Partners a firm that buys and sells life insurance for investors and from ailing seniors. The Securities and Exchange allege the principals withheld information that showed that the holding period for investors was far longer than they proposed. The SEC calls it, ‘…baseless life expectancy estimates.’ According to the WSJ revenues have dried up and the company has been showing losses estimated to be in excess of $300,000. Some insurance agents augment income by selling for this or similar companies. Always talk to your advisors both legal and accounting before you write checks or sign documents.

3% yield -lots of stocks in the DJIA paying at least that annual dividend to investors, according to Jeff Reeves at Investor Place.  A very crowded field of stocks including: Kraft, Chevron, JP Morgan and Microsoft. Add the following: Proctor & Gamble, Intel, Johnson & Johnson, DuPont and General Electric. There are more on the list that’ll pay solid dividends with a possible potential upside.

Dow Up Wednesday after a slight pause in the morning as the markets ended mixed. Gold still moving up and Oil closed over $102.00.

Autos may once again shine, even though one analyst (I know of) said stay away from Ford. Others seem to like the autos, even General Motors. WSJ reported how auto financiers were getting less edgy with customers who were late with mortgages or behind in payments. Industry may be having a good year as customers are looking to replace aging cars. Ford sales were up 10% in December, GM up 4.6% and Chrysler was up 37%!

Say, ‘Bankruptcy!’ Kodak, poor management, lousy vision, in rough shape as the company prepares for Chapter 11. The company does make dandy personal cameras and business/personal printers that are comparable with HP and others, but shares closed under 54 cents Wednesday. The company has so far failed in its turnaround by selling patents and licensing deals.

Big Banks see the Federal Reserve Not raising rates until 2014 and will be doing some sort of stimulus in 2012. This could mean, according to the Federal Reserve Bank of New York survey the Fed buys mortgage securities, much as it did in QE2. The Fed is now waking up to tight money for mortgages and understands- finally- according to WSJ- that banks have to loosen up.

Jim Rogers was heard on CNBC Tuesday saying that if Gold goes to $1200 he would be a big buyer. (It’s easy to say when gold is far from that number and no one knows if $1200 is a price that gold hits on its way down to a much lower number! But Jim Rogers wasn’t born yesterday and one of the smartest commodity people in the world). Not this Jim.

This Jim.

 

The Good Old Days Are Back! ‘member Sadie Hawkins? Sock Hops? Thirty cent a gallon gas? The dot com collapse? Analysts played a big role in touting stocks just before the dot com bubble burst- even appearing on CNBC to sell new issues until everything tanked in 2000. Afterwards rules were set in 2003 so that analysts couldn’t tout stocks again. Seems  memories are short lived and Analysts are baaack at it and those investment banks that employ analysts that are favorable to certain companies get the business! Analysts still can tout stocks and in particular Mary Meeker’s student Mark Mahaney, now working for Citi, and, according to Thursday’s WSJ, doing a right-fine job of getting biz for the bank. Meeker, from Morgan Stanley, was about a good an analyst as you could find and Mahaney was a junior under her tutelage. Not always right Mahaney runs a regular meeting with money managers and venture capitalists dubbed, ‘the rally in the valley’. IPOs brought Citi almost $25 million in fees last year, including the IPO Zillow. Expect more of this from Citi and others as the economy get healthier and more money gets to be invested in Initial Public Offerings.

WHAT SECTOR WILL PERFORM 2012?

BEST INCOME GROWTH 2012 SECTORS

Play the lowest P/E with best income growth- match-up.

  Monsanto jumps on corn seed shortage. On news from WSJ on Thursday. Remember corn is used in everything….I mean everything….

 

Markets closed mixed Thursday- opening waaay down and clawing its way to a positive the Dow slipped in at the close. Oil closed up and Joe Terranova in his blog, and of CNBC wrote, ‘Watch the 10-year Treasury and when it rises above 2% increase risk exposure.’

Speculation that the Government would dump $1 trillion into Mortgage-Refi sent bank stocks soaring on Thursday – especially Bank of America +8%. The fact is that Bloomberg and blogger James Pethokoukis are wrong and the government is not going to offer a mortgage refi program. Stocks should come down to earth. They did on Friday…

Weight Watchers STOCK soars on news it cut deals with American Express and NYSE. AmX will pay 100% of the fee for employees to go on WTW and NYSE will pay half. WTW up 8% on news.

Leftover  in the ‘What to Do 2012 News’ bin… Jonathan Burton at MarketWatch writes, ‘…another challenging year…  ’(1) Riskiest play is long-term Treasury as bulls last gasp. Still trade will make money but not as much as 2011. (2) Stick with 2011 winners. (whatever they were). Oh, yes, U.S. stocks over European. (3) Consider small cap stocks. and if buying European ‘cause you just have to…(4) Buy only the best of Europe and the most distressed.

Better than expected Jobs report ended the week with Friday down but overall the Dow was up 1.2% for the first week in 2012. Ahead of earnings next week Alcoa was the lead loser.  Utilities were off 3% the first week. As one of the leading sectors of 2011 it fell unexpectedly as investors sold off for riskier sectors. Michael Kahn, technical analyst at Barrons, wrote that the S&P Bull still looked good as a ‘golden cross’ indicator formed by the 50 day moving average crosses over the 200 day moving average show a longer term momentum – except- some very serious chart resistance for the S&P 500 as it reaches 1350. It closed around 1280.

Euro worries put a kibosh on a potentially bigger week.

Investors still a-bailing…mom and pop investors sold off equities the first week in January. U.S. funds lost $1.1 billion in equity, according to Lipper FMI, not counting ETFs. According to Jon Najarian investors had a mental level on when to get their money out of the markets. This could mean lots of folk will be chasing the market higher if the S&P hits 1300.

Stealth Stocks? Am I the only one watching Apple and Netflix? Someone’s been a-buying….

Finally – NYTimes Columnist Floyd Norris has discovered a 70 year cycle in the S&P500 that followed a 15 year pattern of ups and downs. Using this as a template Norris concludes we have another 4 bad market years before conditions change.

Questions call Paul @ 877 783 7080 or write him at pstanley@westminsterfinancial.com. Share this blog with someone who cares about their money.