2/26/08

Economics

Politics

Domestic

Obama on NAFTA:

http://article.nationalreview.com/?q=MTc2NDRkOGY5NmUwOGZiMWE3NDEzOGE3YzdiYTAwNGM=

International War Against Radical Islam

This is a bit long but gives a decent view of the Iraqi government’s progress towards reconciliation:

http://www.longwarjournal.org/archives/2008/02/inside_iraqi_politic_3.php

The Market

Technical/ Fundamental

Stock prices performed well yesterday, reacting to news that S&P was holding the AAA ratings of MBIA and Ambac Financial debt, continuing rumors of a capital infusion into Ambac and MBIA eliminating its dividend (as part of the effort to retain cash and its AAA bond rating)--more clarity in the resolution of the sub prime problem.

Technically, as a result of the stock price action, both the DJIA and the S&P (1) broke out of the ‘wedge’ formation that I referred to last week to the upside and (2) closed above their August 2007 intraday lows [which were acting as the resistance level of a trading range]. My habit is to never assume a one day break out is a sure thing, so I think patience is important right now. Furthermore, even if prices remain above the August 2007 lows, that doesn’t mean the trend has changed from a trading range to an uptrend. Indeed, all that may be happening is that the trading range has been widened.

But on the assumption that this latest move is further evidence that stocks bottomed in January, I thought that I would re-run the screen that I did last week comparing a stock’s current price with that of its August 2007 intraday low, the August low close, the January intraday low and the long term trend in place in August 2007--the purpose of which is to focus on (1) stocks that have really strong technical patterns [i.e. are currently trading above all four of those markers] and that are trading near or in their Buy Value Range [potential Buy candidates] or (2) conversely, those that are trading below two or more of the markers [potential candidates for elimination].

On the positive side,

in the Dividend Growth Universe: Manulife Financial, Northern Trust, Genuine Parts, VF Corp, Sysco and Canadian National (Wells Fargo, Brown Forman, and 3M are above three markers),

in the High Yield Universe: Pfizer, Hospitality Properties Trust (Kimco Realty Trust is above three markers)

in the Aggressive Growth Universe: Reliance Steel (American Eagle Outfitters is above three markers)

On the negative side,

in the Dividend Growth Portfolio, McGraw Hill, Clorox and GE are below two markers,

in the High Yield Portfolio, Martin Midstream is below two markers,

in the Aggressive Growth Portfolio, CME Group, Eaton Vance, Luxottica, Medtronics, Quest Diagnostic, Sun Hydraulics, Expeditors Int’l, FactSet, Microsoft, Rockwell Collins and SAP are all below two markers

News on Stocks in Our Portfolios

Donaldson Inc (Aggressive Growth Portfolio) reported its second fiscal quarter earnings per share of $.43 versus expectations of $.42 and $.39 recorded in the comparable 2007 fiscal quarter.

A positive write up on General Electric (Dividend Growth Portfolio):

http://seekingalpha.com/article/66100-ge-nuclear-growth-galore

More Cash in Investors’ Hands