Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

Market Thoughts



The near-term weakness in energy minerals, especially natural gas, is a plus for the stock market:

Erlanger Natural Gas Chart

Our ears still are ringing from all those professional traders from the floor of various commodity exchanges urging traders to believe that natural gas was a sure bet to go from $15 to $20… minimum! Now that the March contract is barely holding $7, it would seem those traders represented that kind of froth that kills an advance. Crude oil has not had nearly as dramatic a tumble, but it is pulling back enough to spur investors towards transportation issues:

Erlanger Transportation Groups

Working on the railroad is not only the best ranked transportation industry, it tops all 139 industry groups we follow. Trucking, air freight and airlines rank in the upper echelons.

We are not expecting much out of the stock market for seasonal reasons. March can be a particularly treacherous month. However, we are getting some unexpected signs of healthy activity, especially in terms of leadership. Transportation issues are famous as economic bellwethers. Technology issues are high beta (meaning they are super sensitive to the direction of the market as a whole.) So, when technology performs so well in a choppy market, attention must be paid. These and other factors have kept us from taking short positions so far this year.

Erlanger HPQ Chart

Hewlett-Packard (HPQ) is a classic example of a short squeeze. Short interest ballooned last month when price pushed to new highs. Shorting strong issues rarely pays off. Moreover, seasonal patterns are strong for HPQ into March. The recent peak in choppiness followed a minor pullback. Yesterday's action did bring the choppiness down to extremely low levels, indicating that its advance is maturing.

Next week we get fresh short interest numbers. They may provide a clue as to whether or not the sentiment picture can help the market turn its rally into a sustained uptrend. For now, we want to cautiously pick and choose stocks to ride the river with. We would love to say that the market is out of the woods, but the March-to-early-April seasonality suggests tempered enthusiasm. Stay tuned.

< Previous
  • 1
Next >
No positions in stocks mentioned.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.

Featured Videos