So I Lied
We told you I would finish reading this week Barron's and give a guess or two about the balance of the week. Well, I lied.
After reading the entire Barron's magazine, I got the distinct impression that they (most of the authors) are bewildered as to why this rally is carrying on with out a real breather. Yes the economic new is better and continuing to improve, but the data is improving off of some historical lows. The marginal improvements are taking place against the back round of volatile extreme uncertainty in Europe, and explosive situation in Syria, a little debt problem here at home, and the threat of significant oil supply disruption from Iran. We have become numb to those issues and assume the market has priced in all of the possible outcomes. So the rally continues.
As Cramer says, "Don't look a rally horse in the mouth." (Although, I can't actually remember him saying those actual words. Perhaps I should send them to Stephanie, his producer and she can get them on the air. Remember you heard them hear first.) Let's not ask questions, let respect the green flag and watch our core holdings and discover some new leaders. I did some of that yesterday with the help of IBD. We will give you a couple to do homework on in a minute.
The other reason we do not have a boxful of data points for you this week is because there aren't any. Wednesday you got existing home sales which should come in better than the 4.7 million unit expectation. Good for the market. Thursday we have the ever improving initial jobless claim number. We are not sure this will continue to improve this week look for a flat or slightly rising number, say 358,000 new claims, up 20,000 from last week, a slight disappointment to the market. Friday we have consumer sentiment and new home sales look for both to beat expectations, which should give us a nice way to tend the week.
CAT Caterpillar Inc. manufactures and sells construction and mining equipment, diesel and natural gas engines, industrial gas turbines, and diesel-electric locomotives worldwide. It operates through three lines of businesses: Machinery, Engines, and Financial Products. The Machinery business offers construction, mining, and forestry machinery, including track and wheel tractors, track and wheel loaders, pipelayers, motor graders, wheel tractor-scrapers, track and wheel excavators, backhoe loaders, log skidders, log loaders, off-highway trucks, articulated trucks, paving products, skid steer loaders, underground mining equipment, tunnel boring equipment, and related parts. It also manufactures diesel-electric locomotives; and manufactures and services rail-related products and logistics services for other companies. The Engines business provides diesel, heavy fuel, and natural gas reciprocating engines for Caterpillar machinery, electric power generation systems, marine, petroleum, construction, industrial, agricultural, and other applications. It offers industrial turbines and turbine-related services for oil and gas, and power generation applications. This business also remanufactures Caterpillar engines, machines, and engine components; and offers remanufacturing services for other companies. The Financial Products business provides retail and wholesale financing alternatives for Caterpillar machinery and engines, solar gas turbines, and other equipment and marine vessels, as well as offers loans and various forms of insurance to customers and dealers. It also offers financing for vehicles, power generation facilities, and marine vessels. The company markets its products directly, as well as through its distribution centers, dealers, and distributors. It was formerly known as Caterpillar Tractor Co. and changed its name to Caterpillar Inc. in 1986. Caterpillar Inc. was founded in 1925 and is headquartered in Peoria, Illinois.
We included the entire definition of the company because we wanted to remind you of all the market segments they play in. If this global economy is on the mend (citing the probable contraction in Europe) CAT is well positioned. Their fundamentals are solid. They have spent the last 20 years getting well positioned in many global emerging markets. The had a good 4th quartet beating estimates. The management team headed by Oberhelman is well seasoned and saying real nice things about 2012. Technically, they have a nice clean buy point at $114.75 and they closed Friday at $113.95.
Cramer likes the company, IBD put the company on their exclusive leader board as of last Friday. We are going to do a littel more homework but we are thinking about looking for and entry below $114.00. Our immediate stop will be at $104.88. Do Your Homework.
Another Green Flag consideration might be UA Under Armour, Inc. develops, markets, and distributes performance apparel, footwear, and accessories for men, women, and youth worldwide. It offers products made from moisture-wicking synthetic fabrics designed to regulate body temperature. The company provides its products in three fit types: compression, fitted, and loose, extending across the sporting goods, outdoor, and active lifestyle markets. Its footwear products comprise football, baseball, lacrosse, softball, and soccer cleats; slides; performance training footwear; and running and basketball footwear.
We took an 11% stinger on this stock (Fell asleep at the wheel for a portion of my shares were not stopped at the 8% rule.) last November. Management changed their earnings expectations and the stock took a nasty dump. They now seem ready to meet or exceed those earning numbers and their fundamental are still attractive. Here a re few soft and gushy things that make me interested in the stock. Their shoe segment is growing to the point that Nike has taken notice. They have had inventory problems with some bloating. They have hired some very experienced supply chain management folk to address the problems. Their on-line and branded stores are selling more as a percentage of sales. They may be spending a bit more than they should to grow, but the brand and the product is great. I love the feel of my UA shirts. Their propriety synthetic can not be replicated and they have a few tricks up their sleeve when it comes to new materials.
Technically, there is a beautiful cup formed between Nov 4 and last week. I would like to see about a 2-3% drop from Fridays close with soft volume before looking at the obvious 87.56 buy point. We will be patient and wait for the right time to get in, but we like what we are seeing. IBD added this to their Leader Board and Baron's did a nice piece on it a couple of weeks ago. DO YOUR HOMEWORK.
As I wrap this up (11:16PM), it looks like China likes what it see out of Europe, so look for a nice opening in the market tomorrow. Then I am confident that at sometime during the day, the "deal" in Greece is not everything it is cracked up to be and the market will still close up, but well off the days high. What do you think?
Salve Lucrum
