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Steady Markets Reflect Steady Economy     

It’s been quite the ride up for markets in 2012.  If you’re keeping score, we have the SPX up 6.7%, Nasdaq up 11.5% and the Dow Industrials higher by about 5%.

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Pretty good numbers for an entire year, but for the first five weeks of the year?  Off the charts!  Could the markets have been so undervalued prior to the new year starting?  Are bonds all the sudden poison ivy?  Did the situation in Greece and Europe suddenly make everyone so bullish?  Or is it seasonal trends?   Some of these questions are yet to be answered but when trying  to figure out the market – we’ll let it ‘do its thing’ and not try to explain the action.  Low volatility marks little fear.  For now, stock-picking is the game to play.

Strong Performance for us this week - and we have lightened up some.  However, still some good stuff in the oven.  TIME FOR YOU TO SIGN UP!  Do it right here.  Our month of February is off to a fantastic start.  12 winners, 4 losses.  Results below:

February 09, 2012
10:44 | Bagger Vance HAL ($37.00) Sold to Close HAL FEB 37 CALL Feb 37 calls, at $0.67 -52%
10:40 | Bagger Vance MOS ($56.34) Sold to Close MOS FEB 55 CALL Feb 55 calls, at $1.80 -4%
10:39 | Bagger Vance JNPR ($23.30) Sold to Close JNPR FEB 22 CALL Feb 22 calls, at $1.42 -24%
10:38 | Bagger Vance RRC ($63.00) Sold to Close RRC FEB 60 CALL Feb 60 calls, at $3.70 +106%
February 08, 2012
07:18 | Bagger Vance EOG ($111.10) Sold to Close EOG FEB 110 CALL Feb 110 calls, at $3.30 +16%
07:07 | Bagger Vance VCLK ($19.40) Sold to Close VCLK FEB 17 CALL Feb 17 calls, at $2.25 +50%
06:37 | Bagger Vance CERN ($68.50) Sold to Close CERN FEB 60 CALL Feb 60 calls, at $8.50 +150%
February 07, 2012
07:25 | Bagger Vance APC ($85.38) Sold to Close APC FEB 80 CALL Feb 80 calls, at $5.75 +69%
February 03, 2012
12:07 | Bagger Vance POT ($47.00) Sold to Close POT FEB 45 CALL Feb 45 calls, at $2.44 +22%
12:06 | Bagger Vance ETN ($51.10) Sold to Close ETN FEB 45 CALL Feb 45 calls, at $6.20 +55%
12:05 | Bagger Vance FSLR ($45.75) Sold to Close FSLR FEB 45 CALL Feb 45 calls, at $2.56 +11%
08:04 | Bagger Vance LVS ($51.70) Sold to Close LVS MAR 50 CALL Mar 50 calls, at $3.50 +40%
February 02, 2012
08:51 | Bagger Vance RIG ($48.60) Sold to Close RIG FEB 47.5 CALL Feb 48 calls, at $1.95 +32%
08:47 | Bagger Vance PXD ($105.00) Sold to Close PXD MAR 105 CALL Mar 105 calls, at $4.90 +69%
February 01, 2012
07:45 | Bagger Vance BRCM ($36.65) Sold to Close BRCM FEB 35 CALL Feb 35 calls, at $2.00 +43%

 

We’ll be heading into the last couple of big weeks for earnings as February winds down.  While there are always earnings to consider the majority will be done reporting for Q4 2011 by the end of February.  By and large the results are as I had expected – strong for the biggest and brightest, a few struggles but most with a decent outlook toward the future.  This past week saw some major breakouts on the charts.

Look no further than Apple – a near high of $500 a share.  The stock lifted nearly $30 on the week, a 7% rise.  Others kept up the pace and delivered strong results such as BWLD, CSTR, CERN and CMI.  Several energy names are on tap this week along with names like BIDU, CF, ANF, CLF, WTW, APA, GM, and VFC among many others.  With expiration week upcoming it should be a very interesting time.  Let’s talk a little Fed, housing and Bernanke.  With the explicit dovish policy by the Fed, it appears the Chairman is targeting areas of the economy that could use a bit of juice.

Friday he talked about housing and the drag that it has become on growth.  Some have implied his bold comments will signal another round of QE, but I disagree.  The housing market seems to at least bottomed and at best will show some growth.  Some experts and even Weyerhaeuser believe new home starts will be roughly 650K per month this year, a far better pace than in 2011 (but well off the hot pace of five years ago plus).  The chart below shows perhaps the slow climb is happening.  So, does the Fed need to ‘prime the pump’ more?  Highly unlikely, just as they didn’t do much to improve the domestic economy recently other than some ‘choice words’ and rhetoric.  We can argue day and night about it but the reality is sentiment and psychology are chief drivers of action.

The Fed is more likely to ‘manage the mind’ rather than destroy what has been achieved.


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