Tuesday, July 21, 2009

Catepillar Makes Positive Comments On Global Recovery

The S&P 500 closed at a new high for the year yesterday, although it did not surpass its intraday high of 956. This is a tough juncture. Performance anxiety could force underinvested managers to chase prices higher, fueling more of a short-covering squeeze. But there is also a long history of the market making tops in July, so I want to be careful about being dragged into the market.

There were some more solid earnings reports last night. Texas Instruments (TXN) and Catepillar (CAT) both topped consensus estimates. TXN also issued upside guidance for next quarter. CAT said they are seeing signs of stabilization, and that credit markets have improved significantly. Also, they see the price increases for many key commodities as a positive indicator for investment (in their industry).

California took a step towards mending its budget crisis last night when the Governor struck a deal that would include spending cuts of around $15 billion, include new borrowing, but no new taxes. The cuts are not likely to go over well with many folks that live here in Cali, but they are sorely needed and should have been initiated many years ago, imo.

Asian markets rose overnight, for the 6th straight session; the 10-year yield is sharply lower today, down to 3.48%; and the VIX is higher to 24.92.

Trading comments: No trades so far today. Yesterday I took partial profits on IBM and IEZ. The market is once again overbought, but with the 200-day average flattening out soon on the S&P, I think it should offer stronger support the next time we come down and test it. For now, I think we are at the higher end of the summer range I have been talking about.

long IBM, IEZ


At 8:28 AM, Anonymous Anonymous said...

Jordan, do you own stocks in any of your family's personal IRA or educational accounts? If so, I would be interested to know the names. I'm just curious what types of companies you view as core, long- term type stocks.

For what it's worth, I have about $10k in my 4 year old's education IRA spread across COP, GE (new position, not a bag holder) KO, MCD, MJN, WMT.

At 8:49 AM, Blogger J. Kahn said...

I mostly use mutual funds and etfs in my family's IRAs. My kids stuff is in Utah's 529 plan run by Vanguard.

There are stocks I like as core holdings, but be careful labeling something "long-term". Every holding needs to be monitored, and if things change you HAVE to sell it. Even if you love the company.

I view core holdings right now as names like GILD, SLB, GS, WFC, V, AAPL, GOOG, RIMM, CME

At 9:19 AM, Anonymous Anonymous said...

Thanks for the response ... agree on reassessing positions


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