-0.69%
-0.80%
A positive payroll report capped off another bullish week on Wall Street. The S&P 500 (SPX) is within striking distance of its July high and about 1.5% below its April 2011 high. With a gain in the SPX of about 7% so far this year, we are within 3% of my probability weighted price target of 1,381, but still far away from my more aggressive year-end target of 1,435.
All I can say is that if you have not already begun to raise cash then now is the best time to do so. I raised more cash on Friday, although I did reinvest some of it into existing positions of Canadian Oil Sands (COSWF). I will be adding further to my cash today. As I mentioned to Cody Willard when we had a conversation on Friday afternoon, given that I have some positive alpha this year, I will likely be using that cash to buy some hedges and further take down the risk in my portfolios.
I am beginning to see that the high dividend payers are underperforming. This leads me to believe that the bid in these stocks has disappeared and is flowing to more risky growth issues.
The NY Giants and Eli Manning beat the New England Patriots and Tom Brady once again in a tightly player Super Bowl. My family went out at late last evening to buy Super Bowl apparel at the local sporting goods stores. While it may be time to celebrate the championship, I did tell my wife and friends that the Giants won the Super Bowl in 1987 and 2008, just before two market crashes. However, I do not profess to expect that another crash will occur in 2012. I do expect a pullback in the coming weeks.
We will begin a two week period of food, beverage, restaurant and consumer retail related earnings reports today. Barron’s did one of its classic hatchet jobs this weekend on Buffalo Wild Wings (BWLD). The newspaper cited rising chicken wing costs. However, the price of wings is volatile and the company knows how to manage accordingly. Furthermore, the company serves much more than just chicken wings. Of course, the article comes just as the stock hit an all-time high and a few days before its earnings announcement.
Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView Asset Management, LLC was long COSWF and BWLD — although positions can change at any time.
Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. You can subscribe at www.restaurantstox.com
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You can email Scott at [email protected]
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