Quite the roller coaster this week. But our list continues, for your reading and trading pleasure.
An interesting facet of the weekly filter data is that we no IBD Supply/Demand companies. In other words, there was little institutional buying last week. Also, I noticed that the IBD rankings were significantly lower than last week. Stocks that were rated A were bumped to B, and those at B were bumped to C. (Those rated B or C will not appear below.)
|Symbol||BB||Zacks||PEG||SuppDem||VL||IBD Stock checkup|
I added three companies to the core list and dropped four. TD Ameritrade (AMTD) is a discount broker. Oracle (ORCL) is that big database company that Microsoft can't seem to dislodge. MEMC Electronic Materials (WFR) produces wafers for the semiconductor industry worldwide. I suppose the stock symbol refers to "wafer."
SYNA, KCI, LOGI, and SXE have been dropped from the core list.Core list (with n of 10 weeks passing):
While the US markets took off Monday for the Martin Luther King holiday, foreign stocks tumbled. Not to be outdone, the US futures had a huge selloff before the market open on Tuesday, with the Dow expected to fall around five hundred points. The Fed swooped in with a rate cut, and gave investors the confidence to pare the losses to 150 points. Wednesday saw a swing from 300 points down to 300 points up.
Pundits are changing their tune from asking if a recession will happen to wondering if we're already in it.
Just to remind you, a recession is "called" by the National Bureau of Economic Research (NBER). Here is their definition:
A recession is a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales.Note that the news for whether we are in a recession will, by necessity, be delayed for several months as the data are gathered.
Bank of America and Wachovia both announced awful quarters, but jumped on the announcement. (If you want to know why, think of the Wall Street adage, "Buy the rumor, sell the news." In this case, speculators did the converse, knowing that bad news was coming. So they sold the stock in advance of bad earnings, and bought on the news.)
The condition that John Hussman described in his December 17 column is coming about:
That would be if we see a relatively uninterrupted series of declines that breaks cleanly through the August and November lows, followed by a one-day advance of 200-400 Dow points.
I am not sure if Wednesday qualified for the one-day advance, but it certainly seems to. I was thinking that the market might rally to its 20-day moving average, but I am going to let it tell me what it's doing, rather than me call the shots.
Here is a graph of the CBOE Volatility Index, known by its symbol, VIX. You can see that it touched this volatility in August of last year, when the market was in a sharp downdraft. Since the volatility of the market is so high, it would make sense to sell options. I think a bearish call spread would make sense at this point. That would entail selling a call above the current price and buying a call further out for protection.
I hope you're having fun. I feel like I'm just beginning to figure out how the puzzle pieces fit together. Trade well!