B>PAUL'S STOCK ADVICE AND COMMENTARY FOR JULY 30TH THRU AUGUST 3RD:
Even as the U.S. GDP grew 3.4% year over year, our trade deficit narrowed and inflation seemed to moderate, it was the consumer spending element of the Commerce Department’s report that grabbed the headlines last week. It showed a 1.3% increase in consumer spending during the second quarter versus 3.7% in the first quarter. While Wall Street seemed to cheer the GDP report in the early going, the continuing fear of tightening credit brought on by news of subprime mortgage defaults and unconsummated mergers saw to it that the market indexes closed near their lows of the day. With last week’s market action all of the major market indexes have descended well below their 50-day moving averages. But given the fact that Friday’s down day was on receding volume, a volatility index (VIX) that reached well above 20 on Friday, and the current RSI levels, it would seem we’re oversold and due for a bounce soon. Still, extreme caution is advised as this market will need a period to stabilize and the market will likely prove very susceptible to negative economic/earnings news. Look for a passel of economic news
Tuesday morning with reports on personal income and spending, core PCE inflation, the employment cost index, the Chicago PMI, consumer confidence and construction spending due to be announced. Then on
Wednesday morning, look for car and truck sales, crude inventories, pending home sales, and the Institute for Supply Management’s manufacturing index.
PAUL'S TRADING HIGHLIGHTS FOR LAST WEEK:
Leading stocks fell with the market’s action last week, with many of them appearing to reach critical support areas. Meanwhile, a few of the leaders we’ve been discussing thumbed their noses at the market’s misfortunes—largely the beneficiaries of strong earnings reports. Apple (AAPL) still remains in nosebleed territory and may continue moving northward, barring something unforeseen. It seems that strong iPhone sales have ignited its Mac and iPod sales. Baidu.com (BIDU), too, seems none the worse for wear, and Cummins (CMI) has held up very well. Research In Motion (RIMM) saw some selling on Friday, but it’s hardly caved in to the market’s pressure. Meanwhile, Deckers (DECK) was up $13.21 Friday! An interesting sidelight to Friday’s initially positive movement early in the day and the eventual sell off, is that many stocks have formed inverted hammer reversal patterns near their areas of support, so one would expect a bounce before too long, but again, let caution be your watchword at this point.
For further stock advice and stock picks for the week ahead, including exact buy points, please visit:
http://www.StockConfidential.com/
