1/3/08

Economics

A look at the link between housing prices and rents:

http://bigpicture.typepad.com/comments/2008/01/how-far-must-ho.html

Politics

Domestic

International War Against Radical Islam

The Market

Technical

Four short and somewhat conflicting notes:

In a Morning Call two weeks ago, I mentioned DJIA 13069 as a support level to watch. Well, we all know what happened yesterday; so on a very short term basis, I am now watching 12723 (November intraday low) and 12509 (July intraday low) as the next possible support level; in other words, it looks like the short term trend is down.

The biggest current seasonal influence is now the ‘January effect’, which is the tendency of stocks that were beaten down in the prior year to rebound. Didn’t seem to be working yesterday--which I fear means that those calls I bought in Citicorp, Merrill Lynch and Wells Fargo may not work. If any of you nibbled along with me, remember we sell them next Friday (1/11)--period.

There is also a technical axiom that holds that stocks’ performance on the first trading day of a year is a sign of how they will perform in the first month, which in turn is a sign of how they will perform for the year. Clearly, yesterday was not a good beginning.

Finally, historically stock prices are up in an election year; however, as I mentioned yesterday, I see two potential risks to that scenario: a recession and a Democratic sweep in the elections.

Bottom line: I repeat my admonition of a couple of weeks ago. This will likely be a volatile year for stock prices, so caution (cash reserves), for the moment, is very important.

Fundamental

Dougie Kass’ (a perma bear) predictions for 2008:

http://www.thestreet.com/_htmlbtb/newsanalysis/investing/10396519.html

Subscriber Alert

The stock price of Genuine Parts (GPC-$45) has fallen below the upper boundary of its Buy Value Range. Accordingly, GPC is being Added to the Dividend Growth Buy List. The Dividend Growth Portfolio will not Buy this stock at this time.

The stock price of Marathon Oil (MRO-$61) has risen above the upper boundary of its Buy Value Range. Therefore, MRO is being Removed from the Dividend Growth Buy List. The Dividend Growth Portfolio will continue to Hold this stock.

The Dividend Growth Buy List

Company Close 12/14 Buy Value Range

Johnson & Johnson $65.91 $60-69

Abbott Labs 55.81 51-59

Illinois Tool Works 52.17 50-58

MDU Resources 27.55 25-29

3M 82.71 81-92

Eli Lilly 52.55 49-56

Graco 36.81 36-41

Sysco 30.41 30-33

Linear Technology 30.45 29-32

Automatic Data Processing 43.22 44-49

General Electric 36.78 35-39

Fortune Brands 72.00 69-79

Ingersoll Rand 44.90 41-47

Meredith Corp 53.76 49-56

Genuine Parts 45.04 42-48

News on Stocks in Our Portfolios

A positive write up on gold:

http://www.thestreet.com/p/_htmlrmd/rmoney/metals/10396739.html

More Cash in Investors’ Hands