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The market is stuck in the mud. But that might be a good thing, considering that tariff uncertainty is back. This time, tariff fears are just keeping stocks from going higher and not crushing the market, so far.


The administration is currently threatening to enforce 30% tariffs on Mexico and the European Union (EU) starting on August 1. However, investors perceive a strong chance that President Trump will either back off the threat or make deals.

Tesla’s fourth-quarter earnings were almost exactly in line with what the options market predicted. It’s an example of the value of understanding options.

Financial stocks, namely those in the investment, life insurance and annuities realm, are so cheap that many have become takeover targets. Take advantage.

The market has acted well since its Monday morning shakeout—that dip pushed the S&P 500 and other indexes below their 50-day lines, and even had the S&P 600 SmallCap kissing 16 week lows, but buyers stepped in and have generally driven prices higher since.

We remain mostly bullish—our Market Monitor is currently at a level 7 (out of 10), and we could push it a notch higher depending on how things go today and Monday. Thus, you should be heavily invested. But we’ll wait for some decisive strength to floor the accelerator.

As for the market, last week, we said that Wednesday’s huge distribution day was a shot across the market’s bow—while it didn’t break the overall bull market, we thought the next few days (or couple of weeks) would tell us whether that was more of a shakeout or the start of a topping phase.

The market remains in a bull mode, with the trends of the major indexes and most individual stocks pointed up. That said, we’re starting to think differently when it comes to the short-term vs. the long-term.

This week, we are rolling forward our valuation comments – generally dropping our valuation based on 2021 estimates, where appropriate, while adding commentary based on estimates for 2023. Most analysts project that all of their companies will have higher earnings in future years, so we take the 2023 estimates (which are over two years away) with a grain of salt. And, they almost certainly will be wrong – we just don’t know in which direction or by how much. However, these estimates are helpful in understanding the level and direction of consensus opinion, especially between earnings reports when there is usually little hard news or fundamental data at the company level to support estimate changes.

Investors seem to have abandoned commodity gold and the shares of gold miners like Barrick Gold. The commodity gold price has slipped 11% from its recent peak of $2,043/ounce while Barrick’s shares have tumbled 37% since reaching nearly $26/share earlier this year.

As we march toward spring it appears real-world risks are decreasing (more vaccines, lower case count, etc.) while the market risk for growth stocks has gone up (higher yields, volatility, etc.), at least in the short term.

As I scanned through dozens of charts and evaluated stories for this month’s addition my focus was repeatedly drawn to one stock. The chart is compelling, the story is enticing, and the recent Q4 report and forward guidance illustrate sound fundamentals, supported by long-term demand growth.



The stock appropriately balances the potential risks and rewards in the current market.



Enjoy!

As the coronavirus correction rolls on, wise investors adapt,by selling weak stocks, holding cash and making smaller strategic investments in new opportunities.

Today, for our portfolio, that means selling two current holdings (one for a loss and one for a profit) and recommending a fast-growing medical company that has notonly a great growth story but also a chart that has been building a base for three months, setting up for its next advance.



Full details in the issue.

Last week has the potential to be a landscape-changing week for the market, as the major indexes performed well and, more importantly, leadership quality stocks displayed bullish action. That’s the main reason our Market Monitor above is tilted toward the bulls. Of course, it’s just one week, and nobody who studies the market can declare with certainty that the bear market is over. But it’s all about progress, and last week was a big step in the right direction. This week’s Top Ten remains heavy in energy and commodity stocks, but OptiMo (our screening system) turned up many more candidates than in weeks past; should the market continue higher, we expect many of the leaders to be featured right here in the weeks to come. Our favorite of the bunch is Exco Resources (XCO), a little known energy firm that’s showing tremendous accumulation as prices escalate. Try to buy on weakness.

Stock Name	Price	Buy Range	Loss Limit
FSLR (FSLR)	0.00	250-270	-
FST (FST)	0.00	52-56	-
LUK (LUK)	0.00	48-53	-
MEE (MEE)	0.00	44-47	-
MMR (MMR)	0.00	18-20	-
MOS (MOS)	0.00	112-120	-
RYL (RYL)	0.00	34-37	-
SCHN (SCHN)	0.00	75-79	-
XCO (XCO)	0.00	17-19	-
XEC (XEC)	0.00	53-57	-

We knew a correction was on the way, and the market delivered it last week. The major indexes still look fine, but we’re a bit wary of the action of leading stocks—even in recent days when the indexes are up, most leaders are dropping. That doesn’t mean the bull move is over, but as you can see in our Market Monitor above, we’d cool our heels a bit; don’t hesitate to take a few chips off the table, and remember to cut all losses short. As for buying, we believe this week’s list offers many of the top leaders in the market in various sectors. Not all are near good buy points, but any further weakness should bring them there soon. Our favorite of the week is Hercules Offshore (HERO), a shallow-water driller that has recently emerged from a tight consolidation. We do feel that many energy names can pull back, but HERO should pull back less than most.

Stock Name	Price	Buy Range	Loss Limit
ANR (ANR)	0.00	60-66	-
CLF (CLF)	0.00	87-97	-
CLR (CLR)	0.00	53-57	-
ENER (ENER)	0.00	45-54	-
FRO (FRO)	0.00	58-64	-
HERO (HERO)	0.00	32-34	-
MMR (MMR)	0.00	28-32	-
SOHU (SOHU)	0.00	70-76	-
SU (SU)	0.00	66-70	-
X (X)	0.00	160-170	-

This feels like one of those markets that you’re not sure you should trust given how volatile it was in February. But the combination of revenue growth, earnings growth and decent charts, especially among growth stocks, suggests it’s best not to try to predict too far into the future. For now, the evidence in front of us favors the bulls.

Smart Marijuana Investing + 2 Stocks to Buy and 1 to Avoid | Timothy Lutts, Chief Analyst of Cabot Marijuana Investor, talked about this explosive new sector that’s guaranteed to mint millionaires for those who buy the right stocks. PLUS Tim gave the names of 2 hot stocks to buy and one to avoid at all costs!