Don't know why, there's no market in the sky,
Stormy Weather.
DOW is down, and S&P is in the ground,
Stormy Weather.
So what does the week look like. Unfortunately there is a lot going on and right now the inertia is headed in the wrong direction. Mr. Market is not on his happy med so he might look by the intermittent good news and focus on the bad.
With the whole world craning their necks looking to the sky (especially in South Korea and Japan) to see if the rational folk in North Korea will heed Mrs. Clinton advice to stop shooting off those annoying missiles, they might not notice:
Monday
The Eurozone and Italy will be releasing some merchandise trade data, (undoubtedly disappointing, especially Italy), and that won't help matters.
Tuesday
Canada will make an un-newsworthy monetary policy announcement and a manufacturer's sales report that should be healthy thanks to China. (Watch this one close though if China eases purchases from Canada, that might make a lot of fold nervous.) The Eurozone will release their consumer price information, which we think will be stable as our concern during the recession will be deflation. The ZEW Survery from Germany is released. Think of it as an investor sentiment survey for Germany. Any guesses? Yeah we think it will disappoint.
Wednesday
The UK will release its monetary policy meeting minutes YAWN! It will also release its latest employment figures. Probably not good news.
Thursday
Japan will announce some merchandise trade balance figure that should not be too interesting. BUT keep an eye out for the bond float in Spain. If it goes badly (the rate goes above 6%) look for more than just rain to be falling in the plain. All indexes, perhaps globally might take a huge hit.
Friday
Is a quiet day internationally, but we might be licking our wounds.
Now domestically, Mr. Market has a lot to watch as well:
Monday
A retail sales report whose estimates are so marginal if we don't meet them it will be ugly. We also have the mysteriously important (Probably just because of the proximity to so many traders) Empire State Manufacturers' Survey. Estimates are lower on this as well so a miss can hurt. A housing market index report is due out and is expected to be good news. Let's hope so or else.
Tuesday
Housing starts are expected to be up. With sentiment up (except for the little slip last week) and the good weather a disappointing number does not bode well for the market at all. Industrial production is expected to be up. Let's hope so.
Wednesday
It's quiet today except for mortgage applications which should be up.
Thursday
It's a busy day on Thursday. We have jobless claims which has been below that ugly 400,000 number for weeks now and is expected to drop to the 365,000 level. We are thinking a little disappointment on this one to maybe the 385 range. If that happens in conjunction with a bad Spanish Bond Float. OUCH! Mr. Market will need more than a little Prozac to get through the day. We also have existing home sales due to be flat and we agree. The Philly Fed report ( a survey of Philly businesses) is out and is expected to drop just a teeny tine bit. (Is anyone else noticing a trend here? Then we close out the day with leading economic indicators which is expected to be down quite a bit. Thursday could turn out to be REALLY UGLY if all those stars align.
Friday
We are giving you a day to bury your dead and lick your wounds. There are no significant economic data point out on Friday.
So our observations are (almost said advice, a bozo no no in a blog like this) watch your stops or gains will be blown in the wind. We would not think badly of you if you went completely out of equities, though we are not. We are using the time to build watch lists and do the boring homework. Below is new screen that has an amazing record.
Auer You Looking for a few good stocks
SB Auer Fund is a neat little fund based upon a really simple screen. How would you like to have a 25% average annual return over the next 20 years. Well that has been the funds average over the last 20 years.
When you drive through 4 states for almost 12 hours listening to Bloomber Radio, you get to here a lot of stuff. Bob Auer of SB Auer fund was on with Pimm Fox and they discussed their simple investment philosophy. They screen 8,000 listed stocks for three things. 25% quarter over quarter sales growth. 20% quarter over quarter profit growth and a P/E under 12. Then they buy the stock.
They keep those stocks as long as they meet the first two criteria every quarter. (They ignore the P/E after they buy the stock.) Once the stock does not meet the either of the first two criteria they sell the stock. They also sell the stock once it has doubled in price.
It is very simple to do. I will walk you through the screen using FINVIZ.com. It is free. Go to FINVIZ.com. Click on the tab called screener. In the body of the center field you will see the "Descriptive" Tab highlighted. Right next to it you will see "Fundamentals", click on that tab. There you will see 29 selections to make. We will only be making three, but they must be in the following order.
Find the Sales Growth Qtr over Qtr tab and pull down the options. You will see "Over 25%" as one of the options. Select that option. Right now at 12:07 am Monday morning that screen found 1021 stocks that have qtr on qtr sales of 25% or more out of 7,600 in the FINVIZ data base. Now look at the EPS (earnings per share) Growth QTR over QTR. Pull down the screen options and choose "Over 20%". You are now screening 1021 stocks with quarter over quarter sales of 25% for those that also have 20% qtr over qtr profit growth. That screen drops you down to 584 stocks. Lastly we use the screen options in the upper left hand corner called P/E (Price Per Earnings Ratio) and choose under 15. (Don't worry, this will result in a bit broader screen that 12, but I will show you how to get to 12.)
You now have a screen of all of the stocks that meet the key criteria and it reveals 167 stocks. You will notice that this stocks are listed alphabetically. Go to the P/E column and click on the P/E label. You will now see the list sorted by P/E from lowest to highest. Click on the P/E again and it will list the 167 stocks from highest to lowest.
You will see the first one listed right now is PCAR, Pacar Inc. I(f you got to page three of this screen you will see the P/E ratio go to 11.99. The first company meeting all the criteria of the Auer Fund strategy is, GPR Gulfport Energy. An independent Oil and Gas Company selling for $26.74. You will note that this is number 44 on the list. You now have a complete list of 124 stocks that meet your criteria.
So go and buy them all. I doubt that is what Auer Fund does, but that is what he was saying you should do. This list will change everyday, but not too much. Remember you only have to do this every quarter. The best way to start this strategy is to see who is doing their quarterly reporting everyday and look for those stocks that meet the criteria.
Ok its way past my bedtime boys and girls so turn out the lights the party is over. No pictures tonight.
