09
Jan
2012

What the Market Wants: New Dynamic?

New Dynamic?

Editor’s Note:  Walter Gault is our guest editor this week. Walter is stock analyst and communications editor at Sabrient.  David Brown, chief market strategist for Sabrient Systems, will be back next week.

This week marks the beginning of corporate earnings season. There was light trading today, as investors remained cautious.

Leaders from Germany and France are holding another round of 2-way economic discussions. The euro is at a 16-month low which has pushed the dollar higher. More key auctions on European debt are expected this week as well.

Last week, the market was timidly up on a stronger dollar, which seems to indicate that investors are itching to put their money into U.S. stocks. Typically, a stronger dollar has resulted in weakness in U.S. stocks and commodities. This is because global buyers can’t buy as much with their local currencies in the way of goods, services, and materials that are priced in dollars. Or put another way, sales into global markets don’t exchange into quite as many dollars for the U.S. companies that sell those goods.   So, the fact that stocks are holding up in the face of a strengthening dollar is a bullish sign.

Could it be the beginning of a new dynamic in which stocks rise along with the dollar? This would likely mean that emerging markets and stagnating developed markets are losing investors to the safety of U.S. dollars, Treasuries, and equities.

The national unemployment rate fell to 8.5%, and the private sector added 212K jobs last month. While this is an improvement, unemployment is expected to remain high far into the future.

The Detroit Auto Show is this weekend, and it is expected to be dominated by domestic vehicles. Always exciting, the Consumer Electronics Show in Las Vegas, will bring out the most cutting-edge technology.

Market Stats. Last week most sectors were up over +2% with Basic Materials leading the charge, up +6%, and Utilities bringing up the rear, falling -0.66%. Large-cap Value continues to be the most rewarding cap-style, while the entire Small-cap category has recently brought the lowest returns.

Looking forward, Healthcare, Energy, Basic Materials, Financials, Technology, and Industrials are favored in our SectorCast ranking.

Here are the market stats.

4 Stock Ideas for this Market

This week, I used the GARP (growth at a reasonable price) preset search in MyStockFinder (http://MyStockFinder.com). I also included Buys, in addition to Strong Buys. Here are four stock ideas that look intriguing:

Kronos Worldwide (KRO) – Basic Materials
A.G.C.O Corp. (AGCO) – Industrials
Dana Corporation (DAN)—Cyclical Consumer
Whiting Petroleum Corp (WLL)—Energy

Until next week,

Walter Gault
Stock Analyst & Communications Editor
Sabrient Systems, LLC.
Leaders in Investment Research
http://www.sabrient.com
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Disclaimer: This newsletter is published solely for informational purposes and is not to be construed as advice or a recommendation to specific individuals. Individuals should take into account their personal financial circumstances in acting on any rankings or stock selections provided by Sabrient. Sabrient makes no representations that the techniques used in its rankings or selections will result in or guarantee profits in trading. Trading involves risk, including possible loss of principal and other losses, and past performance is no indication of future results.

Editor's Note

Walter Gault is our guest editor this week. Walter is stock analyst and communications editor at Sabrient.  David Brown, chief market strategist for Sabrient Systems, will be back next week.  (More about David)

Sabrient is a leading provider of independent, unbiased, quantitative equity research to institutions, portfolio managers, investment advisors, and hedge funds, as well as to self-directed investors. The firm is poised to take a quantum leap forward with FSYS, a cutting-edge, proprietary platform.  FSYS greatly advances Sabrient’s ability to create, build, test and execute powerful strategies. You will see some of the power of FSYS in David’s weekly Trader’s Talk column. (Visit Sabrient at www.sabrient.com.)

About This Newsletter
Our goal in this newsletter is to use Sabrient’s quantitative methodology to provide the best hunting ground for styles, caps, and sectors for both longs and shorts – and to provide guidance in areas where you may want to be cautious versus aggressive in your portfolio. In the very near future, we will be using our FSYS platform to produce a look-ahead for the next 1 to 3 months of the most likely performance expected from these styles and caps.

Also, this newsletter is for you. So we welcome your suggestions as to information you would like to see included in this newsletter. You can send your suggestions to traderstalk@sabrient.com.

What the Market Wants
walter / Tag: AGCO, DAN, KRO, WLL /