Investor Stocks #5 | Value Stocks | U.S. Jobs’ Report
Momentum Rider continues their investor stocks series on value stocks that have been strong in the first half of 2012.
The markets acted fairly well last week on the whole. They started with a small retracement through Wednesday, a pullback on Thursday after the ECB disappointed on details, and then a big up day on Friday after a much better US jobs number than many expected. It was a good short squeeze setup after the last few jobs’ reports have caused heavy market selling. The US delivered with 166,000 jobs added compared to the 100,000 expected.
As we stated on Wednesday night’s newsletter, European Central Bank President Mario Draghi would disspoint the markets if he didn’t present details of immediate action and that is exactly what happened. But then the US came back on Friday to save the week with more jobs added than projected and the S&P 500 finished up at 1,391 for a 6 point gain for the week.
It was an important bounce up off the 20 SMA to keep the short term and intermediate term bullish. The upward sloping trading channel remains intact and 1,400 is within reach. The next upside target is the 2012 high near 1,420. On a pullback this week, look for 1,360 (20 SMA) and 1,342 (50 SMA) to provide strong support. The 200 SMA continues to also climb and is at 1,323 on any deep pullback. It is probably another week of trading channel chop between 1,350 and 1,412 on the top side. The technical bias goes to the bulls this week (see chart below).
US Jobs Report Boosts Market Confidence
We still like the Investor Lists from the past several newsletters along with our Commodity Value Stocks blog that have continued to outperform the market.
Power Stock Picks – Strong Investor Stocks #5 (8/5/12):
Investor Stocks Notes:
MR recommends investors continue to remain cautious and lighter on riskier equities until after the longer term financial situation in Europe has more clarity. The short term is back to bullish with the potential to retest the former 2012 highs near 1,422.
Both gold and silver are starting to come up from off the bottom and long consolidation. It could bode well for a strong move in the Fall and in late 2012.
New Commodities Investor Alert: At some point in the Summer, MR believes that China will hit bottom and will start providing evidence of growth. This will be critical for the base metal and energy commodities and stocks to start moving up again. If the news is better than expected, then the commodities could be very strong late Summer and early Fall up to the election. This forecast is one reason we continue to recommend select beaten down stocks in materials, energy, and agriculture. As an aside, China’s just released growth numbers showed that a hard landing is probably not going to happen – just a modest decrease in growth.
Some of our favorites in the commodities area could see 30%+ gains by year end from the current levels. Please refer back to our recent blog covering our top value stocks favorites. Value Stocks in Commodities.
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