3/25/08

Economics

Yesterday, existing home sales were reported up 2.8% versus expectations of a .8% decline. This is the first statistic in a long time that would indicate that the free fall in the housing market could be coming to an end. To be sure, one data point does not a trend make; so before we start tip toeing through the tulips, more information is required. That said, it is a hopeful sign that we may have seen the worst from the source of so much of the US economy’s recent agony.

On the other hand:

http://bigpicture.typepad.com/comments/2008/03/february-existi.html

This may be a precursor to some poor employment numbers:

http://bigpicture.typepad.com/comments/2008/03/changes-in-us-w.html

Politics

Domestic

International War Against Radical Islam

The Market

Technical

Yesterday, the DJIA (12548) pushed through the December 2007-present downtrend line (circa 12434) as well as the August 2007 intraday low (12500); and the S&P (1349) rose above its December 2007-present downtrend line (1346). As always, I want to allow some time and space before declaring these resistance levels successfully breached; but clearly this is positive sign. I pointed out in a prior note that the November intraday closes (DJIA-12722; S&P 1403) appeared to be where the major resistance resides—stocks have approached these levels twice and failed to surmount them. Those are the resistance points I will be watching for signs (i.e. a breach) that this latest decline is over.

Fundamental

Subscriber Alert

Continuing our strategy of selling relatively weak performing stocks into rallies, this morning at the Market open, the Dividend Growth Portfolio will Sell an additional one quarter of its position in Bank of Nova Scotia (BNS-$45) and one third of its position in Clorox (CLX-$57). The High Yield Portfolio will Sell an additional one quarter of its positions in Plains All American (PAA-$44) and Martin Midstream LP (MMLP-$31).

The stock prices of Blackrock Inc (BLK-$225) and Fastenal (FAST-$47) have risen above the upper boundary of their respective Buy Value Ranges. Accordingly, they are being Removed from the Aggressive Growth Buy List. The Aggressive Growth Portfolio will continue to Hold BLK. Since the Aggressive Growth Portfolio never bought FAST no further action is necessary.

The stock price of Suncor Energy Inc (SU-$95) has fallen below the upper boundary of its Buy Value Range. Accordingly, SU is being Added to the Aggressive Growth Buy List. The Aggressive Growth Portfolio will not buy shares in SU at this time.

The High Yield Buy List

Company Close 3/24 Buy Value Range

AJ Gallagher $23.91 $23-26

BP Ltd 60.67 59-68

Rayonier 44.39 39-45

Realty Income Trust 26.75 25-29

Reynolds American 60.56 60-69

RPM Int’l 19.75 18-21

Company Highlight

RPM Int’l is a world leader in the production of specialty chemicals, coatings and sealants serving both the industrial and consumer markets. The company has grown profits and dividends between 5-10% over the last 10 years earning a 15%+ return on equity. RPM should continue to grow as a result of:

(1) strong demand from the major industrial sectors its products serve (oil and gas, power generation and aerospace),

(2) expansion into the marine and international markets,

(3) pricing power that allows it to pass on higher raw material costs,

(4) an active acquisition program

RPM is rated B by Value Line, carries a debt load of about 40% and its stock yields approximately 3.6%.

http://finance.yahoo.com/q?s=RPM

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