The market rallied this week, with SPY moving into the green for April and testing its high from April 11th. I don't have a change in my bullish longer-term view, but I think we are still in the consolidation. It has been less painful for the market than I thought, but it has been worse for certain parts, as the low beta and/or high dividend stocks are doing great while other parts of the market aren't. Even something as simple as CVX vs. smaller energy companies (see my watchlist changes) illustrates this phenomenon. We discussed this at my client meeting on Thursday - hard to tell how long it persists. I think we will need to see signs of GDP lifting or a better China or Europe to reinflate the animal spirits for more economically sensitive names.
The overbought nature of some of these sectors remains, as Staples (XLP) is at 1.19 and Health (XLV) is at 1.14. SPY is at .44, while IWM is at .21. DIA has dropped to .51. The number of stocks on my watchlist closing above the 10dma is 68 of 100.
Turning to the watchlist ( Download Watchlist042613 ), I made several changes, adding ANV, BCEI, ROSE and VAR and killing AMAT, CRK, CTCT and TNC. BCEI is a stock one of my clients bought last year and I am very impressed with their production growth in Colorado. ROSE is an Eagle Ford producer that just bought CRK's Permian assets and has a much better potential to develop them. The guys running it are old Burlington Resources guys. VAR is the leader in radiation equipment for treating cancer - great company, really cheap.
10% winners included MPR, AKAM, IRBT and ILMN, while there were none that fell that much. I couldn't raise my target on AKAM too much, at least yet based on what I saw on the estimates. I use 20PE plus cash and now am at 51. IRBT jumps from 26.50 to 31.50 (25 PE plus cash), but I am cautious. ILMN jumps to 67 (6.5X sales). 35% plus to my return stocks that dropped off were AKAM,POWI and SHFL, but new stocks ANV (75% to a somewhat arbitrary 20 target based on a low PE), BCEI (54% - based on 6.5X EV/EBITDA) and ROSE (44% - based on 6X eV/EBITDA) join VOLC and EOG. Oversold on the watchlist are: ANV (-2.78), NEM (-2.0), VOLC (-1.73), EZPW (-1.64), CATO (-1.28) and TITN (-1.25). On the prospects, EW is -3.38. Our old friend CRR is -1.63 after a nasty report - I still don't like this one. The black 1s continue to decline.
Looking at the positions in the models ( Download Positionwatch042613 ), I am still taking my time on selling MPR, as it likely won't drop if the market pulls back. The buyer, CECE, is trading well, and MPR remains pretty cheap to the offer price, especially when adding in the .07 dividend shareholders will get.
Service Update
I don't think we will be moving this to Marketfy, so I will contact you to remind you to resubscribe (or you can email me and I will set it up as recurring for the $25 until we make that transition). Also, for those who like to follow me in other places, I have been involved in something called Stockviews.com. You can see my picks here.