Anecdotal Evidence

Stocks finished lower yesterday after Obama’s speech. The lows were hit early in the day and stocks managed rally to positive territory before finishing slightly in the red. 
What to make of this? Not much, unfortunately. Ultimately, I think it was a reaction to Tuesday’s overzealous rally. Tuesday seemed to be about short-covering after the S&P 500 held above its November lows at 741. 
While Bernanke’s testimony before Congress on Monday was far more significant than any specifics Obama mentioned Wednesday night, neither event seems to be affecting stocks much. Except for HMO stocks. They’ve been killed this week as Obama is making a push for healthcare reform.
Medical insurers could be hurt by healthcare reform, though I doubt anyone feels particularly bad for these companies. I do think, though, that regardless of potential reform, there’s still some phenomenal upside for certain healthcare and biotech stocks. 
I discussed one during the recent SmallCapInvestor PRO video conference called "Future Fortune Makers." 
You can check out the replay here: 
*****The company is SXC Health Systems (Nasdaq:SXCI). This company helps process prescription transactions. And its technology was involved in nearly 25% of the 3.5 billion prescriptions processed last year. Obama’s push to digitize medical records should be a big catalyst for this stock. 
SXC Health Systems did $593 million in revenue in the last year, but it’s valued at just $469 million. And it’s one of the few impressive companies where earnings estimates are actually rising. For a fast-growing, profitable company in a critical industry, the stock looks very cheap. I’ve got the full details in a SmallCapInvestor PRO Special Report called Healthcare and Biotech Stocks to Buy NOW
In this Special Report, I’m also recommending a biotech that’s got an obesity drug that’s showing good results in late-stage trials. There’s no doubt that an effective weight-loss drug with few objectionable side effects could be a multi-billion dollar seller. And the stock currently trades under $5 a share. 
I recommend SXC Health Solutions as a strong buy right now. And if you’d like to get your hands on Healthcare and Biotech Stocks to Buy NOW, here’s a link where you can get the details: 
*****I came across a very interesting survey from a workforce consulting firm named Watson Wyatt Worldwide (no relation). Their survey concluded that more companies are resorting to pay and hiring freezes, rather than payroll reductions, to weather the recession. 
More than half, or 52% of the 245 companies surveyed, said they’ve already made job cuts. Job cuts were being planned by 13% of respondents, down from 23% in December. 
The survey had a 6.2% margin of error. That’s pretty high, but it doesn’t change the conclusions–that we may have actually seen the worst of the lay-offs. 
I know, that seems hard to believe. And I’m certainly not calling a bottom (or a top, as the case may be) for the rate at which employees are being laid off. Because there are still potential bankruptcies that could result in spikes in unemployment. Also, some companies planning to muddle through might change their plans. 
But still, this is anecdotal good news – exactly what we should be watching to get a feel for what’s really going on. And when the employment tide really starts to shift, it is in anecdotal news that we’ll see the first signs.
*****More anecdotal evidence came from Intel (Nasdaq:INTC). CEO Otellini said that some of the predictability in the semiconductor market was returning. Trading volume on Intel stock was huge Wednesday, too. Clearly, some investors see value with the stock trading at 1996 levels.

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