It’s been another solid week for the market, with the major indexes kiting higher and, while individual stocks were a bit more mixed and news-driven, most are acting just fine.
Overall, not much has really changed from a week ago—the vast majority of evidence remains bullish, especially the primary evidence (trends and action of the major indexes and key leading stocks), which tells you what big investors are doing right now.
That said, you shouldn’t get too far over your skis, either. The title of my Cabot Growth Investor was “Positive—but not Pounding the Table” which tells you our thinking. If you’re heavily invested, we’d certainly be riding most of your winners (partial profits are fine here and there, as always), and some new buying is fine if you find solid setups.
We don’t want to overemphasize the handful of yellow flags out there. Obviously, the market could pull in at any time, which simply means you want to be more discerning on the buy side. Simple as that.
Michael Cintolo, Cabot Top Ten Trader, www.cabotwealth.com, 978-745-5532, February 14, 2020
Gold is Bullish
We’re already seeing governments react to fears that the coronavirus outbreaks will drag on global economic growth. They’re cutting interest rates and firing liquidity cannons, and more “preventative” action will follow. Thanks to inflation, when benchmark rates go very low, real interest rates—which take inflation into account—go negative. Sometimes this happens even if the benchmark rate is still positive. The bottom line is that gold is bullish for all sorts of reason. But the government reaction to the coronavirus adds more fuel to the fire. Pullbacks can be bought.
Sean Broderick, Weiss Ratings, 1-877-934-7778, www.weissratings.com, February 10, 2020
Global Pessimism looks Overblown
Fed Chairman Powell told Congress that monetary policy is appropriate for a resilient economy facing low inflation and China risks.
Earnings are well ahead of expectations, led by tech. No, this is not another dot com bubble. The Nasdaq rose 99% in the last five years. In the bubble’s five years, it rose 531%.
Analysts disagree on how much buying power remains to fuel the stock rally. RBC thinks it’s “quite low;” Northwestern Mutual thinks it’s “a lot.”
The concentration of the coronavirus remains in Hubei, China.Chinese deaths are 1,665. To reach the proportion of China’s population that flu deaths reached in the US in 2018, the figure would need to be 259,000.
Many analysts warn of a Chinese and global economic slowdown, but China is confident it will emerge stronger, and its central bank is supporting businesses.
Jason Kelly, The Kelly Letter, http://jasonkelly.com/kellyletter, February 16, 2020
Tyson Foods, Inc. (TSN): A Comeback, but still Undervalued
Tyson Foods, Inc. (TSN) is one of the world’s largest food companies, with operations in 20 countries, and is a recognized leader in protein. Leading brands include Tyson, Jimmy Dean, Hillshire Farm, Ball Park, Wright, Aidells, ibp and State Fair.