Not Too Hot, Not Too Cold
The parallels between the current recovery and the "jobless recovery" of 2003-2004 just keep coming.
Readers may remember the period, marked by investors' "not too hot, not too cold" bias. Stocks would sell-off if economic data was too good, because it implied the Greenspan Fed would reverse its interest rate policy.
Conversely, data that hugged the flat line, came in slightly positive, or even slightly negative, would rally stocks because it meant there was no danger of an end to the low interest rate environment.
I would contend that it's the best possible news for today's new jobless claims and 2Q GDP revision to come in slightly better than expected.
As we know, the Bernanke Fed has stated it stands at the ready to pump more liquidity into the system if growth remains weak. Today's data does nothing to undermine that promise. And at the same time, the slight improvement reinforces the notion that the economy is recovering, just not fast enough. Perfect!
Today is the last day of the Third Quarter. And September has been a great month for stocks, the best since 1939. As you know, I got bullish in the final days of August. And the S&P 500 jumped 95 points.
Unfortunately, the stock I chose to ride was Bank of America (NYSE:BAC). It jumped out strongly to start the month, but has seriously lagged over the last couple of weeks. The stock still looks attractive to me, and I have a hard time seeing it drop back to tangible book value, which is around $12.60.
Despite this morning's bullish bias, I would expect to see a pretty sharp move lower for stocks, either today or tomorrow.
The S&P 500 is up against resistance at 1,150 for the umpteenth time in the last 8 sessions. And after such a great run, it would seem likely that mutual funds will take some gains on either the last day of the third quarter or the first day of the fourth quarter.
Also, 3Q earnings kick off next week with Alcoa (NYSE:AA) on Friday, October 7.
Such a move would very likely be a dip to buy...
Oil prices have been on fire lately. Crude is pushing $80 a barrel. But this time, oil and other energy stocks are responding with some solid gains.
Oil stocks were virtually ignored during the summer. It's about time oil and energy stocks started moving.
My favorite oil stock from the Energy World Profits portfolio is up better than 16% in the last 5 trading days. All told, Energy World Profits subscribers are up 29% on the stock since May.
If you're interested, the company is Bakken shale oil producer Brigham Exploration (Nasdaq:BEXP). It's got one of the best land positions in the Bakken, and it's also executing one of the most aggressive drilling programs. And, it's produced several of the top-producing wells in this exciting region.
I'm not sure I'd run out and buy the stock at current levels. But on a pullback, it would be very attractive. Brigham is just one of 3 Bakken oil stocks in the Energy World Profits portfolio.
If you don't know about the Bakken, you should. It's now the second largest land-based oil reserve in the U.S., after Alaska. It's now estimated that the Bakken could add as much as 1 million barrels a day to U.S. oil supply.
You can learn more about the Bakken and how to profit from America's last great oil reserve HERE.
