Rocket Stocks For The Week of October 27-October 31 Portfolio - Stockpickr! Your Source for Stock Ideas

Rocket Stocks For The Week of October 27-October 31

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Date updated:11-06-2008

There are several reasons to be bullish on the markets:
Stock prices have now dropped to 2002 levels. The only difference here is that corporate earnings and profits on the S&P 500 are about 50% higher since that time.
Oil prices and most commodities prices have more than halved, since their July peaks. Corporate profits should improve as the recent drop in input costs (such as oil, natural gas, and metals) will act as a tailwind to profit margins going forward. Companies like Dow Chemical (DOW), which yields north of 7% and Gushan Environmental Energy (GU), which is China’s largest biodiesel producer, and is a $3 stock with $2 in cash and $0 debt on the books; these are just two companies that will see a positive effect from the recent drop in commodities prices. Inflation is low, which will give the Federal Reserve additional room to ease
Even still today, 50% of subprime loans are still paying, 95% of total home loans are still paying, and the ABX, which is the subprime index, is actually rallying
Overall short interest in the mark Short interest in the NYSE has reached historical leaves, at almost 7%. This represents about 18 billion shares which are sold short. With the market having gone down in a straight line this past year, the easy money on the short-side of the market has already been made. Whenever a trade gets so one-sided, as it has with the short positions in the market, even the slightest bit of positive news could move the market substantially higher is at record levels, with hedge funds reporting their lowest net-long positions since 2002. Things like this do not happen at market tops, but rather near market bottoms
“Don’t Fight the FED” is the saying that is used to justify buying stocks once the FED starts stimulating the economy.
The VIX and VXO are at record levels, trading only at premiums only seen once or twice ever.
Credit is slowly thawing: 3-month LIBOR is falling (albeit from extremely distressed levels), TED spreads are falling, and overnight LIBOR is at a multi-year low. Things are improving
Over the last 2 weeks, leveraged CEO’s are being margined called, and forced to sell their equity. This happens at bottoms, not tops
6% unemployment is a good thing! In fact, buying the market, every-time unemployment rate hits 6% and selling six months later had the following result: 42 occurrences since World War II, 33 successes (80%), with an average return of 6.57% during the six-month period. Is this statistically significant? Randomly buying and holding for six months results in only a 3% return with only 64% success. So yes, an unemployment rate above 6%, for whatever reason, is statistically significantly bullish over the six months that follow. The results were also very good over one-month, three-month, and 12-month periods
We are currently in a massive deflationary environment, which could give the Federal Reserve room to cut interest rates more. As I stated above, we have seen the largest single monthly decline in the price of commodities in the past 30 or 40 years, that is deflationary. Since the single most important factor in determining someone’s wealth is the price of their home a 25%-30% drop in the average price of one’s home is clearly deflationary. Sadly, neither PPI or CPI account for the drop in housing prices. Additional, various economic studies have shown that when housing prices appreciate on paper people spend more, likewise when they drop, they spend less----all deflationary. Moreover, we are spending hundreds of billions, if not trillions of dollars in aggregate sum with the Iraq and Afghanistan war. These are dollars which are leaving our country and going somewhere else; again deflationary. Plus, the TIPS market (or Treasury Inflation Protected Securities) market is yielding its lowest levels of the year, bolstering claims that inflation is abiding. All of this gives the Federal Reveres ammo to cut rates.
Are things bad in our economy? Of course, but if you wait for Mr. Market to ring a bell for you at the bottom, you are likely to miss a substantial move higher.

ACI
Arch Coal Inc
$22.26
-2.88%
$22.60

No Analysis added

People owning ACI also tend to own: AAPL AEM COP ERF GOOG HAL NE

TheStreet.com Rating: C What is this?

CF
Cf Ind Hldgs Inc
$82.73
-0.17%
$82.35

No Analysis added

People owning CF also tend to own: JBSS PBY SUAI TBAC TECUA TRA CDE

TheStreet.com Rating: B What is this?

BMRN
Biomarin Pharmace
$16.97
-2.13%
$17.25

No Analysis added

People owning BMRN also tend to own: BIOM BLDP DJO EICU FUL HWCC MEMY

TheStreet.com Rating: C- What is this?

VLO
Valero Energy Cp
$16.47
+0.67%
$16.60

No Analysis added

People owning VLO also tend to own: BZH GSF MCF SWN WHT ASH ATG

TheStreet.com Rating: D+ What is this?

BBBB
Blackboard Inc.
$41.82
+0.38%
$41.87

No Analysis added

People owning BBBB also tend to own: AMGN ANF CWCO ELOS HAR IIF MER

TheStreet.com Rating: B- What is this?

CLF
Cliffs Natural
$43.02
+1.75%
$41.48

No Analysis added

People owning CLF also tend to own: AKH FPL PWEI SNE WOS IR PPL

TheStreet.com Rating: C What is this?

GLF
Gulfmark Offshore
$28.01
0.00%
$N/A

No Analysis added

People owning GLF also tend to own: BA CPSI DAR EPAX SPAR THO UA

TheStreet.com Rating: C What is this?

ICO
International Coa
$4.43
+0.23%
$4.33

up 40%

People owning ICO also tend to own: AAV ABXA ADG AMAT AQR BGR BXL

TheStreet.com Rating: C What is this?

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